The Chinese economy just surpassed the U.S. economy to become the world’s largest in terms of purchasing power, according to the International Monetary Fund.
The IMF measures economic strength by Gross Domestic Product (GDP) in both market exchange rates and average purchasing power, the latter being where China has overtaken the U.S. with a GDP of $17.6 trillion by the end of 2014 — 16.4 percent of the world’s purchasing power. The U.S. will close out the year with a purchasing-power adjusted GDP of $17.4 trillion, or 16.2 percent of the world’s total.
Financial Times predicted the change in April and illustrated China’s new economic dominance in series of charts late Tuesday.
“In the spring, the International Comparison Program calculated new exchanges rates for comparing output of different economies,” the Times reports. “At the time it suggested that China was the world’s largest economy because money went significantly further in China than previously thought. Now it is official.”
The U.S. still maintains its dominance in raw terms not adjusted for purchasing power by $6.5 trillion, as illustrated in this chart by Business Insider.