Will the 'Age of America' end in 2016?
A house sits boarded up in Detroit where the population has declined 25% since 1910.
April 26th, 2011
09:39 AM ET

Will the 'Age of America' end in 2016?

By Peter Shadbolt, CNN

Is the "Age of America" drawing to a close? According to the International Monetary Fund (IMF), its demise as the leading economic power is five years away and the next president of the United States will preside over an economy that plays second fiddle to China's.

The lender posted data on its World Economic Outlook that puts 2016 as Year Zero for China as the world's dominant economic power - the year when China's growth trajectory intersects the decline of the U.S.'s share of world gross domestic product in terms of purchasing price parity.

According to the figures, the Chinese economy would grow from $11.2 trillion in 2011 to $19 trillion in 2016. Over the same period, the U.S. economy will rise from a dominant $15.2 trillion to a trailing $18.8 trillion.

But, as the saying goes, statistics are often used like a drunken man uses a lamp-post - for support rather than illumination.

An analyst at the IMF said in a statement much hinges on whether economic size is measured by purchasing power parity - what your money can actually buy on the ground in any given economy, the basis of the famous "Big Mac" index - or GDP at market rates - which is measured by converting the national currency into a common currency (normally the U.S. dollar) and measuring how much is flowing through the economy.

The IMF projects U.S. GDP in dollars will be $15.2 trillion this year while China's will be $6.5 trillion, rising to $18.8 trillion and $11.2 trillion respectively by 2016. Under this measure, the US looks likely to stay the world's No. 1 economy if current growth rates are maintained.

"The IMF considers that GDP in purchase-power-parity (PPP) terms is not the most appropriate measure for comparing the relative size of countries to the global economy, because PPP price levels are influenced by non-traded services, which are more relevant domestically than globally," the IMF said.

"The Fund believes that GDP at market rates is a more relevant comparison. Under this metric, the U.S. is currently 130% bigger than China, and will still be 70% larger by 2016."

Nevertheless, the PPP index still has its fans, with some contending that China could be even stronger than it appears on paper thanks to the current artificially suppressed level of its currency.

"China actively suppresses the renminbi on the currency markets through massive dollar purchases. As a result the renminbi is deeply undervalued on the foreign-exchange markets. Just comparing the economies on their exchange rates misses that altogether," said MarketWatch columnist Brett Arends.

"Purchasing power parity is not a perfect measure. None exists. But it measures the output of economies in terms of real goods and services, not just paper money. That's why it's widely used to compare economies. The IMF publishes PPP data. So does the Organisation for Economic Co-operation and Development (OECD). Many economists rely on them," he said.

While the slope of the graph is declining for the U.S. and rising for China, reports of the death of the U.S. economy look certain to be greatly exaggerated and could still be many decades away.

Other measures such as per capita income as a proportion of GDP still sees the United States many years ahead of China and other readings that measure social and structural problems could still see the Chinese juggernaut blow a tire yet.

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Topics: China • Economy • United States

soundoff (25 Responses)
  1. Matt

    With the world being in the sorry shape that it's in today,the end of the "Age of America" may not be such a bad idea. The right-wing thugs in Washington do have a knack for fouling things up and how!!! For those who disagree with me,just look at Iraq and Libya!!!

    April 26, 2011 at 9:51 am |
    • KeithTexas

      You got it right except whom to blame. The Democrats are just as big crooks as the Republicans any day.

      The Congress and Senate are responsible for all the problems we have in America today. The two political parties have taught you the blame game. You are willingly playing it so that way no one is help responsible for their actions.

      Graft and Corruption reigns supreme with no controlling entity, I am quite sure it will continue until the whole mess collapses around our heads. The beginning of a kind of change that will make America great again, will be for you and others to quit letting them lie to you. You are so accustom to listening to lies that you no longer recognize them for what they are.

      May 14, 2011 at 8:26 pm |
      • Herbert Sydney Johnson I,m just saying

        Kieth,Texas;Not bad considering where you live. That state is all Republicans and your not on talking point. I would add the intitlement that occurs with big Bus. and purchased threw lobbists is the demise of U S A.in that the lies that are told are reinforced by state and fed Gov. This same thing is happening in Canada,Just under a different guise and either the people are dumb or there to lazy to get informed and believe the Gov . will look after us. { I'm just saying }

        May 19, 2011 at 12:41 am |
    • Logic

      And currently Pakistan. By preparing a business case against the country... the grounds for next war are being set

      May 15, 2011 at 12:18 pm |
  2. j. von hettlingen

    Maybe the reality is not as dim as been depicted, it is always good not to be overconfident. If things come out better than expected, it's good, if not, the disappointment will not be too depressing. It will be interesting to see, how heavy a price the Chinese have to pay for their success!

    April 26, 2011 at 5:57 pm |
  3. The Chosen One

    I see a future with an American Union (AU) in which we will remain #1 as the global economy. The efficiences generated by creating an America that spans N. and S. America will help us counter the balance of power shift to the east. The American ideology is very accepting of this type of endeavor. This would move our population from 300M to 900M and it would let us easily counter China's growth. We would simply help our own in America to counter China's growth. The entire continent is relatively democratic and it would put pressure on non democratic nations that continue to exist.

    As a mature America, we would easily be able to assist our developing nations in this continent with expertise and experience in engineering and building nations. It would be a worthy challenge for America. It would be exciting and bring new opportunities for all. An excitement and energy that should not be lost.

    April 27, 2011 at 1:26 am |
    • james2

      First, you have to put a stop to the senseless war on drugs taking place in Mexico. Second, the US would need to convince Brazil that allying with the US is more in their interest than allying with China/India/Russia.

      April 27, 2011 at 2:04 am |
      • j. von hettlingen

        Good point! In fact during the cold war, the U.S. invested a lot of time and energy in South America. It got bad press wiith the coup against Allende in Chile, South America is the backyard of the U.S and it is relatively quiet there. A strong American Union like the EU we have in Europe is not unthinkable. The question is, whether this issue is on top of Hilary Clintons's agenda!

        April 27, 2011 at 3:24 am |
      • j. von hettlingen

        Good point! In fact in the 1960s the U.S. invested a lot of time and energy in South America. It got bad press wiith the coup against Salvador Allende in Chile. South America is the backyard of the U.S and it is relatively quiet there. A strong American Union like the EU we have in Europe is not unthinkable. The question is, whether this issue is on top of Hilary Clintons's agenda!

        April 27, 2011 at 3:27 am |
      • kapt

        don't you need a Libyan style intervention in Venezuela then?

        April 28, 2011 at 12:08 pm |
      • Logic

        what about the next war in Pakistan.. the genie has been pulled out in that land for no reason.. right?

        May 15, 2011 at 12:20 pm |
      • Jamaal Abdul-Rahim

        Good point, james2. But, how do we do that?

        May 19, 2011 at 12:19 pm |
    • Dave

      To The Chosen One, I agree with your input about our beloved country! Our country will remain strong and prosperous...furthermore, what makes our country so strong is our patriotism with strong democratic values!

      April 27, 2011 at 10:46 am |
  4. Cosmo

    Just posted this on another forum, but the numbers presented in this article are incorrect. China just surpassed Japan as the second largest GDP either late 2010 or early 2011. So, there 2011 GDP will probably end up around 6.6 trillion. Looks like the IMF report pegs the Chinese GDP at 2016 at 11.2 trillion, which is in line with China's historical GDP growth rate of approximately 10%. The US current GDP is approx 15.5 trillion. CNN needs to go back and double check the numbers and give clarification to this article, or retract it entirely. Will China's GDP surpass the US? Yeah, most likely it will, but not until the mid 2020's assuming historical averages hold.

    April 28, 2011 at 1:16 pm |
    • Herbert Sydney Johnson I,m just saying

      So your saying CNN's out by a few years with the same result;{ I'm just saying }

      May 19, 2011 at 12:50 am |
  5. Cosmo

    Yup, look at this link form the IMF:

    Shows the US GDP at 18.8 Trillion in 2016, China at 11.2 trillion. Assuming these growth rates hold through the 2020's, China would surpass the US in 2025.

    April 28, 2011 at 1:22 pm |
  6. CharlieSeattle

    Don't like China's rise? To bad, China is exactly what we have allowed it to become.

    Obama and Congress can repeal China's MFN (Most Favored Nation) Trade status and bring 8 million lost jobs back to the USA anytime they wish. That was Clinton's gift to America in 1999 in exchange for laundered Chinese campaign contributions.

    Republican supporters and big business would stop that.

    Major Corporations have found that China's State Sponsorship of Capitalism is the idea market for them to be in.

    Unlike the US....
    No environmental laws.
    No child labor laws.
    No Patent enforcement.
    Blatant counterfeiting of US products.
    No Unions.
    Low wages.
    Long hours.
    No benefits.

    Lol, Even US Corporate expenses related to out sourcing American jobs are tax deductable. Its true. Google the thread and read it for yourself.

    It is really to Ironic that the very same Americans displaced by outsourcing, and out of work, pay the tab for those very tax deductions.

    April 28, 2011 at 5:47 pm |
    • Herbert Sydney Johnson I,m just saying

      That is a result of the conservative agenda and your a lier Charlie. {i'm just saying }.

      May 19, 2011 at 12:58 am |
    • Devin DeFrancesco

      Are you crazy?
      "Republicans and big business will stop this"
      You mention, in your own post, that major corporations are to blame. Isn't it very obvious that big business, and by extension the pro-business party (Republican party), is very much to blame. Not some honorary, largely irrelevant title?

      May 25, 2011 at 10:16 pm |
  7. Dr David Hill

    China has entered its 4th Phase of their Global Economic Blueprint and we should all be highly concerned

    Although my Swiss S&T Foundation has been warning of the developing economic might of the East and its social and economic effects on the West for two decades now, western economies are now forewarned that China has now entered its fourth phase of its economic blueprint and where the head of the their central bank has advised their government to offload some US$2 trillion of reserves – or in other words US$2,000,000,000,000. Indeed the bank advises that they invest at least this amount of the US$3.04 trillion they presently hold in reserves, into technologies and investments that will enhance the nation’s future prosperity further. Not many economists warned at the start of the 1990s of the dire effects that this massive balance of economic power transference would have on the West and only in relative recent times have they come to realise this (no more than a decade ago). This enormous buying power, that is increasing at around US$200 billion a quarter in further Chinese reserves, will see vast numbers of western corporations and therefore western jobs fall into the hands of the Chinese (and other eastern corporations). This is just the start of the fourth phase of the Chinese blueprint and where China’s ultimate goal is to capture the dominance in global innovation that will provide for them an unassailable lead in global wealth in the 21st century. Our charity has known these facts for years but no western government has taken any notice. Now this sheer complacency on the part of our politicians and industrialists will simply reap absolute havoc on western economies and their people. But the big question is, when will these same pillars of our western establishment realise that the only way to stem this vast economic and social threat to our people, is to develop and put in place the creative infrastructure where all the people’s thoughts can bear down onto this great economic imbalance. Again our Swiss charity has been stating to governments for two decades to implement this world-leading pre-eminent thinking but where again unfortunately, they simply have not listened. For it is the only way to turn the tide and create whole new industrial global bases. In this respect we need the ideas people to be fully harnessed and allowed to flourish. If we do not understand this, we shall simply see over the next two decades a vast unprecedented decline in our living standards. Therefore our politicians have been advised and warned again, but where this time if they do not listen, they will see their people impoverished like never before. Wake up western governments to the realities that reside on the horizon for us all if we do not change our economic thinking radically.

    Dr David Hill
    Executive Director
    World Innovation Foundation

    April 30, 2011 at 7:57 pm |
    • Herbert Sydney Johnson I,m just saying

      Again you have not shown me where you got your facts from. But for a brief second I will believe your statement as fact.I would add that we live in a global world and the Chinise are our Brothers and sisters and we must act accordingly.There are two sides to trust. { I'm just saying}.

      May 19, 2011 at 1:13 am |
  8. Logic

    Probably why US wants to pull China into a war in Pakistan

    May 15, 2011 at 12:17 pm |
  9. Herbert Sydney Johnson I,m just saying

    FACTS DUMMY { I'm just saying }.

    May 19, 2011 at 1:15 am |
  10. joseelr

    Hasn't it already ended.....

    May 21, 2011 at 10:19 pm |

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