This article explains how China’s ranking as the world’s second largest economy is merely built on it’s massive population.
China has recently surpassed Japan’s economy and has stolen the second rank for the largest economy but when you compare the population of Japan and China, you will see that the ratio is 1:11. Hence, this massive difference is what enables China to have a greater GDP.
However, even though China has surpassed Japan’s GDP, it’s per capita income is still 1/10 of Japan. Therefore, China has a larger economy, but it is not a rich economy. In other words, the country as a whole is rich, but the people aren’t.
It is said that if China keeps going at this rate, it will be able to surpass the United State’s economy by 2030. (The rate of China’s economy expanding is greater than the rate of the U.S.)
With another GDP measure called, purchasing power parity, (PPP) it proves how products in China are worth less and therefore are cheaper. Furthermore the PPP “[tries] to reflect the differences in costs of living and tend to boost the economic rankings of poorer nations.” An example of this is that in China, a haircut may only cost $1 but the same haircut in the United States may cost $10.
Mana's Blog 