2 min read

China Is Larger Than Germany

“Well, duh”, you might say, but actually until recently it was not. GDP-wise that is. Based on 2007 numbers, the top economies in the world were:

  1. the US of A, $13.8 trillion
  2. Japan, $4.38 trillion
  3. China, $3.38 trillion
  4. Germany, $3.32 trillion

Media coverage around this change has a lot of interesting facts, worth reading Bloomberg and Washington Post for example:

China’s economy is 70 times bigger than when leader Deng Xiaoping ditched hard-line Communist policies in favor of free- market reforms in 1978.

China also has a big stake in the U.S. economy, holding $652.9 billion of U.S. Treasuries.

Since introducing free-market policies, China has lifted 300 million citizens out of poverty, according to the United Nations

Global interests spanning African oilfields and South American mines are encouraging China to add to its military might.

And speaking of the future. If both China and US were both to keep their average growth rates, it would take 18 years to change the top spot. However, in the ongoing recession the curves will start changing:

China is one of the few major economies that is on track to have positive GDP growth this year. Merrill Lynch calculates that China will have a GDP growth of 8 percent as compared with a 2.8 percent decline for the United States, a 1.3 percent decline for Japan and a 0.6 percent decline for the European Union.

Under these circumstances, we’re rather talking about a decade?

If you are interested in this power play, I recommend reading the ChinAfrica post from last summer. Or even just see the foreign exchange reserves graph from there.

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