联合国报告：中国有望今年超美成为最大经济体

choi

VOA Chinese, Apr 30, 2014
www.voachinese.com/content/un-re ... 140430/1904301.html

, which is translated from

Report: China Could Overtake US Economy This Year. VOA, Apr 30, 2014.
www.voanews.com/content/report-c ... s-year/1904363.html

choi

Press release: 2011 International Comparison Program Summary Results Release Compares the Real Size of the World Economies. International Comparison Program (ICP), World Bank, United Nations, Apr 29, 2014.
www.worldbank.org/en/news/press- ... ize-world-economies

Quote:

(1) " The International Comparison Program (ICP) released new data today * * * Under the authority of the United Nations Statistical Commission, the 2011 round of ICP covered 199 economies - the most extensive effort to measure Purchasing Power Parities (PPPs) across countries ever.

(2) "The six largest middle income economies – China, India, Russia, Brazil, Indonesia and Mexico – account for 32.3 percent of world GDP, whereas the 6 largest high income economies – United States, Japan, Germany, France, United Kingdom, and Italy – account for 32.9 percent.

(3) "The Price Level Index (PLI) is the ratio of a PPP to a corresponding exchange rate. An index over 100 means prices are higher on average than in the world, and one less than 100 means prices are relatively lower. The most expensive economies in GDP terms are Switzerland, Norway, Bermuda, Australia and Denmark, with indices ranging from 210 to 185. The United States ranked 25th in the world, lower than most other high-income economies, including France, Germany, Japan, and the United Kingdom.

(4) "The five economies with the highest GDP per capita are Qatar, Macao SAR, China, Luxembourg, Kuwait, and Brunei. The first two economies have more than $100,000 per capita. * * * The United States has the 12th highest GDP per capita.

(5) "Limitations in the use of the data * * * Because of the complexity of the process used to collect the data and calculate the PPPs, it is not possible to directly estimate their margins of error. * * * PPPs should not be used as indicators of the under- or overvaluation of currencies. They do not inform what exchange rates 'should be.' PPPs do not reflect the demand for currencies as a medium of exchange, speculative investment, or official reserves. * * * The ICP should not be used to compare changes in an economy’s PPP-based GDP over time. Experience has shown that * * *

My comment:
(a) Regarding quotation 3. We all know that goods in US are relatively cheap compared to those in Europe. Just try to buy gasoline in Europe, where tax is high.
(b) Regarding quotation 4. That is Macau/Macao (not China per se). But ordinary people there earns little, even for casino employees.
(c)
(i) In the entire press release (the only exception is in (ii) immediately below), GDP (PPP) is measured by "expenditure." See, e.g., "The approximate median yearly per capita expenditures for the world – at $10,057 – means that half of the global population has per capita expenditures above that amount and half below."
(ii) The press release also states, "A general measure of material well-being of each economy’s population is measured better by actual individual consumption per capita – a measure of all expenditures in the economy that directly benefit individuals – rather than by GDP per capita. By this measure, the five economies with highest actual individual consumption per capita are Bermuda, United States, Cayman Islands, Hong Kong SAR, China, and Luxembourg, respectively. * * * The world average actual individual consumption per capita is approximately $8,647."
(iii) There three ways to calculate
Gross domestic product
en.wikipedia.org/wiki/Gross_domestic_product
(section 2 Determining GDP: Production approach, Income Approach and Expenditure approach)

Any of the three approaches includes "consumption" (as well as "investment") as a component. See, e.g, expenditure approach. All three approaches should yield similar (but not necessarily identical) figures. What (ii) tells us is that Americans (public) consume but Chinese consume little and money in China goes to capital investment (like factory and railroad), but that both nations yield similar GDP (as this ICP report has us believe, but other estimates--also based on GDP (PPP)--such as CIA World Factbook--places China half to two thirds of US figure.
(d) The statement in quotation 5, that "PPPs do not reflect the demand for currencies as a medium of exchange, speculative investment, or official reserves," means--correctly--that currency is like other goods, which experience price hike when in demand and price reduction when demand is lax.

choi

The home page of ICP
icp.worldbank.org/
remarks, "The Summary of Results and Findings of the 2011 International Comparison Program (PDF)  [link supplied] was published on April 30, 2014. * * * The ICP 2011 Final Report will be released by the end of July 2014, and will provide detailed results and in-depth analysis."

In the summary:
(1) Table 6.1, starting at page 34 of the summary, lists GDP (PPP) by expenditure:

……………………………..GDP (US$, billions) ….. GDP (PPP) per capita ………….. Price level index
China (excluding Macao, Hong Kong and Taiwan)  13,495.9 …. 10,057 …. 70.0
Hong Kong SAR, China  354.5 …. 50,129 ….. 90.5
India  5,757.5 ….. 4,735 ….. 41.7
Macao SAR, China  64.3 ….. 115,441 …..73.8
Singapore  374.8 ….. 72,296 ….. 91.4
Taiwan, China  907.1 …. 39,059 …. 66.1
Russian Federation  3,216.9 …. 22,502 …. 76.2
Australia [whose population is similar to Taiwan’s]  956.0 …. 42,000 …. 201.0
Canada 1,416.2 …. 41,069 ….. 161.9
France  2,369.6 ….. 36,391 ….. 151.
Germany  3,352.1 …. 40,990 …. 139.6
Ireland  196.6 .... 42,932 .....148.3
Israel  234.2 …. 30,168 …. 142.2
Italy 2,056.7 …. 33,870 …. 137.8
Japan  4,379.8 .... 34,262 .... 173.6
Korea, Rep  1445.3 .... 29,035 .... 99.4
Luxembourg  46.1 .... 88,670 .... 162.4
Mexico  1,370.1 .... 11.844 .... 77.2
Netherlands  433.7 .... 25,983 .... 149.4
Norway  153.6 .... 31,914 .... 220.0
United Kingdom  2,201.4 .... 35,091 .... 144.2
United States  15.533.8 .... 49,782 .... 130.5

The notation about China in both tables 6.1 and 6.2 says, “The results for China are estimated by the 2011 ICP Asia and the Pacific Regional Office and the Global Office. The National Bureau of Statistics of China does not recognize these results as official statistics.”

* It is never explained, but China’s figure most likely does not include those of Hong Kong, Macao or Taiwan.

(2) Table 6.2, starting at page 40 and with a heading “Actual Individual Consumption” (PPP):

….Actual Individual Consumption (US$, billions) …… Actual Individual Consumption per capita ……Price level index
China  5,811.5 …. 4,331 …. 67.4
Hong Kong SAR, China  231.2 …. 32,690 …. 89.4
India  3,675.4 …. 3,023 …. 37.4
Macao SAR, China  13.2 …. 23,649 …. 81.4
Singapore  128.2 …. 24,725 …. 110.7
Taiwan, China  583.6 …. 25,129 …. 64.0
Russian Federation  2,169.4 …. 15,175 …. 63.0
Canada  946.0 …. 27,434 …. 160.2
France  1,724.6 …. 26,486 …. 148.3
Germany  2,328.9 …. 28,478 …. 135.3
Ireland  105.5 …. 23,043 …. 163.0
Israel  159.0 …. 20,483 …. 140.7
Italy  1,449.8 …. 23,875 …. 138.2
Japan  3,125.1 …. 24,447 …. 170.4
Korea, Rep  870.2 …. 17,481 …. 95.6
Luxembourg  16.6 …. 32,000 …. 182.9
Mexico  1,370.1 …. 11,844 …. 77.2
Netherlands  433.7 …. 25,983 …. 149.4
Norway  153.6 …. 31,014 …. 220.0
United Kingdom  1,640.3 …. 26,146 …. 146.7
United States  11,667.0 …. 37,390 …. 124.7

* Divide China’s 5,811.5 (Actual Individual Consumption) by 13,495.9 (GDP (PPP)), one gets 43.1%. In other words, consumption as a component of GDP (PPP) is 43.1% for China.