Summary: China’s economy is often compared to America’s using two different methods: nominal GDP and purchasing power parity (PPP). While nominal GDP shows China falling behind due to a weaker currency, PPP suggests it is actually ahead. These differences highlight the complexity in measuring economic power between the two countries.
Despite all the headlines about trade deficits and such, most of what Chinese people buy is produced within China, and most of what Americans buy is produced within America. This includes rent, medical care, transportation, and so on. That means that the material living standards of Chinese people and Americans will be determined much more by local prices than by international ones. (View Highlight)
Housing, medical care, child care, and other services are incredibly important determinants of how pleasant a life citizens of various countries lead, and to just leave these out of international comparisons and focus only on electricity and cars and ships makes little sense. (View Highlight)