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The "United States of China" -- U.S. States as Provinces of China

|Includes:iShares China Large-Cap ETF (FXI)
China is a dynamic economic powerhouse that most Americans have learned to fear.

Yet, its cultural and geographical remoteness makes it hard to get your head around.

Just how big -- and powerful -- is China today?

On the one hand, Nobel Prize-winning economist Robert Mundell gushes that by 2040, the Chinese economy will reach $123 trillion, or nearly three times the economic output of the entire globe in 2000. China's per capita income will hit $85,000 -- more than double the forecast for the European Union.

On the other, today’s reality is that 600 million Chinese -- twice the population of the United States -- live on less than $5 a day...

Here's one way to view today's state of play...

 

This map substitutes a Chinese province with a U.S. state whose Gross State Product (NYSEARCA:GSP) approximates the GDP of that Chinese province.

China has 22 provinces, much like the United States has 50 states -- small ones in the East, and vast expanses in the West. Also, much like in the United States, the provinces in the coastal regions of China tend to be industrialized, while regions in the hinterland are less developed.

The map also highlights Taiwan, which China considers to be its 23rd “renegade” province...

A disclaimer. These figures are approximate -- culled from a combination of the Economist magazine and assorted publicly available statistics.

And the Chinese figures are also probably overstated. The Economist noted in a similar exercise comparing Chinese provinces to countries that the sum of reported GDPs from Chinese provinces is a tenth higher than the national total.

Li Keqiang, a member of China’s nine-person Politburo Standing Committee and a potential successor to President Hu Jintao in 2012, revealed in a conversation leaked by WikiLeaks -- Chinese provincial GDP figures are “man-made” and, therefore, unreliable. And in what is certainly the single-most under-reported story ever about the Chinese economy, in February 2008, the World Bank concluded that the size of China's economy has been overestimated by around 40.0%.

So take these -- and any other statistics you hear about China -- with a grain of salt.

With those caveats, here are a couple of highlights:

• The economy of China's biggest province Guandong is roughly the size of Pennsylvania, the state with the sixth-biggest economy in the United States.

• Shanghai's economy is about the size of Wisconsin's.

• Beijing's economy is the size of Kentucky's.

China's special regions (including “renegade” provinces like Taiwan) are by far the wealthiest per capita.

• Hong Kong's economy is about the size of Connecticut’s.

• Renegade province Taiwan’s economy is about the size of Michigan’s.

• Asia's Las Vegas -- Macau -- boasts an economy about the size of Vermont's.

Undeniably, China has made progress over the past few years...

Taking Chinese statistics at their face value, as recently as 2005, China's economy was roughly the size of California's ($1.9 trillion). Then it grew to a combination of California and Texas ($3.1 trillion).

Today, you'd need to throw in New York, Florida and Illinois to match China's collective economic heft.

But the most revealing fact is this...

Tally up the populations of all of the “states” depicted on this “United States of China” map (excluding Taiwan and Hong Kong), and you reach a population of 112 million... versus 1.34 billion for all of the “real” China...

China may be set to rule the world... 

But the average Chinese resident has got a long way to go to reach that $85,000 per capita income by 2040...



Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: This article originally appeared on NickVardy.com and TheGlobalGuru.com
Stocks: FXI