A recent article highlighted the figure below that provides an interesting history and projection of the world’s top economies.

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As noted in the article, “The U.S. economy wasn’t always the biggest in the world. And in a few years, it will most likely lose its position as the biggest economy in the world.”

China’s economy (currently around $8 trillion) may top the U.S. economy (about $16 trillion) by 2030 with China’s current growth rate roughly three times faster than the U.S.; however, this does not necessarily mean they will be better off.

China’s standard of living (measured by GDP/capita) would continue to be much lower because they have almost 5 times more people. 

Today, GDP/capita in the U.S. is currently $51,000 (pop: 315 million) and in China is only $5,700 (pop: 1.4 billion). For the Chinese to have the same standard of living as the U.S., China’s economy would need to be around $80 trillion.

Of course, these projections assume both GDP measures are accurate. No matter how much I think ours may be off, I am much more skeptical of China’s data and there is little chance they will keep up their high growth rates (convergence). I’m also hopeful that drastic policy changes will unleash the U.S. economy.

Bottom line: China may catch-up to the U.S. in GDP terms, but they will still lag behind in many areas, including standard of living.