We in North Carolina know a thing or two about politicians and pundits misusing economic data.
Meanwhile, the latest Bloomberg Businessweek cautions us against misreading trends that suggest China will eventually overtake the United States as boasting the world’s largest economy.
Although economists are skeptical about China’s ability to sustain its current levels of growth, most agree it is only a matter of a few years before the Middle Kingdom’s 1.3 billion or so people produce more than the 310 million living in the U.S. That means history is repeating itself. The U.S.’s reign as the largest world economic power began a little before 1890, when it supplanted the previous global giant: China. According to data from the late Angus Maddison, an economic historian at the University of Groningen in the Netherlands, China boasted the largest economy in the world all the way back to 1500. Prior to the 20th century, its run at No. 1 was interrupted only for a brief period around 1700, when India took a turn at the top.
And yet during those five centuries when its economy was the world’s biggest, China was never even close to being the world’s wealthiest country. Italy was almost twice as rich in 1500, the Netherlands almost three times as rich in 1700, and the U.K. six times as rich by 1870. Today, though the GDPs of the U.S. and China are roughly equal, the average person in China lives on an income that can buy only 16 percent of the goods and services of the average person in the U.S., and it will take decades for that gap to close. If you’re an American feeling down about losing top economy status, go take a holiday in Guizhou, a poor western Chinese province where incomes are about one-fortieth as high as the U.S. average. You’ll feel a lot better.
