There's been a discussion in the last two issues of The Gartman Letter (subscription required) about the relative size of China's economy on a per-capita basis, and then adjusted for Purchasing Power Parity. Here are some contributions to that discussion:
- According to the IMF, China's per-capita GDP in 2011 was $5,200, putting it on par with the per-capita GDP of Angola ($5,061), Macedonia ($5,012) and Algeria ($5,001).
- Adjusting for Purchasing Power Parity, China's per-capita GDP in 2011 increases to $8,400, putting it on par with Ecuador ($8,335) and Belize ($8,275).
- Comparing the U.S. to China: Per-capita GDP (in 2011 dollars) in the U.S. first reached a level of $5,200 back in 1850, more than 160 years ago (see chart), and reached $8,400 back in 1905, more than a century ago.
Bottom Line: Yes, it's true that China has made phenomenal economic gains over the last several decades and has become the second largest economy in the world, and it's true that China will probably surpass the U.S. to become the world's largest economy within the next decade. But on a per-capita basis, the U.S. is still a full century ahead of China, and it could take a least another century of economic growth in China before it even comes close to approaching the per-capita GDP in the U.S.
Let's keep it in perspective.