The entire world basically invests in the US, stores their money there, and uses USD as the global currency for everything. That gives the US tremendous freedom to print as much as they want without inflation, keeps prices low for their citizens, and inflates their own salaries and assets. It's a crazy special case and hard to compare other countries to.
Economists were saying that for a lot of countries, each one has their quirks and makes the field rather murky, just look at Japan or Venezuela as examples of countries that just refuse to behave compared to model predictions (especially Venezuela).
Argentina is usually the other example of an economy that doesn’t behave. Was once rich, became poor without the usual reason like the oil curse.
Venezuela is a fairly standard resource curse/ Dutch disease example. One super profitable resource dominates the economy, drives out all other industries, leaves economy extremely vulnerable to changes in commodity prices.
I think you meant Argentina instead of Venezuela. The common tongue-in-cheek saying is that there are four types of economies in the world: Developed countries, developing countries, Japan and Argentina. Venezuela has behaved pretty much as expected, fumbling their economy by bad economic policies and over reliance on oil.
I only hope the all the current political rhetoric that the world shifts just enough to teach the US this lesson. They are not rich without the entire planet carrying them.
I sometimes wonder: What is the purpose of a post like this? Is this really what "data is beautiful" is about? The plot itself by no means meets the criteria of what users here would typically call "beautiful". But much worse, what is the intention of this post? What's the subtext?
To me it looks very self-congratulatory and also denigrating to people from south and east Asia - especially when I go through the comments this post attracted. Maybe I'm naive but shouldn't a graph like this spark a discussion about the rampant inequality in the world or about the shortcomings of this metric (raw GDP numbers)?
Instead I find a wealth of derogatory and xenophobic comments against Asians, American exceptionalism, stupid shit about "Chinese and Indian tears" etc. Draw your own conclusions about what this implies about American society, I certainly draw mine.
Also worth pointing out: I usually call out propagandists and bots from China or Russia, but in what way is the above different? The account has exactly a 6 hour history that starts with this very post which can very easily be described as propaganda and would be called that if the data would have implied Chinese or Russian exceptionalism instead.
A log scale would be more appropriate here — conceptually since economic growth is typically exponential (certainly when not inflation-adjusted, as here), and pragmatically since it would mean the earlier years don’t get flattened beyond readability.
But this subreddit hasn’t had many good visualisations in years, so…
America's largest contribution to their own GDP is consumerism.
Wrap your mind around that.
They are a nation of debt bought and financed by other countries, so that they had wealth to purchase the goods made in other countries, using slave/cheap labour. This was in exchange for the country gaining wealth and becoming the standard dollar, so that they would have the means to provide military protection for the democratic free-world.
But no average American is taught this, and instead they are indoctrinated into a false illusion of exceptionalism and wealth.
So yeah... That's what this data reflects. Slave labour to provide fat Americans with cheap goods, so they could be ungrateful sociopaths and spit in their faces.
What are you talking about. The largest contribution to nearly every GDP is consumption, including India and China. Where do you think the goods and services being produced go?
Have we really reached the point where people are saying "your people's purchase of food and shelter is evil and morally wrong while my peoples purchase of food and shelter is a moral good" with any level of seriousness?
It also suggests the US benefits from running a permanent trade deficit with the world, which is as absurd as saying a permanent trade surplus is good. In reality, both extremes are states that benefit the wealthy at the expense of workers in both places. US banks get the benefit of cheap capital, since Chinese firms and the state need somewhere to park their dollar earnings.
Meanwhile, US workers have to compete with much lower-cost labor (due in part to an over-valued dollar and under-valued yuan), and Chinese workers don't get the value of their savings because one of the ways China subsidizes export firms is by paying very low interest rates on household deposits, and lending out that money to export firms.
For more on this, I highly recommend the book "Trade Wars Are Class Wars" by Michael Pettis -- who, far from a raging Marxist, used to be a bond trader before getting his PhD in economics and getting hired to teach at Peking University.
At some point the question gets asked what access to US markets is worth and what the alternatives are. It wouldn't matter as much if most of the G7 could essentially be counted as offshoots from the US economy, but in a time where the US is pushing trade partners to look for diversification options and trying to exert leverage in trade negotiations? If the data is correct and meaningful, it's very valuable to someone(probably not you or me though.)
Why? Am an Indian and everyone here recognises the fact that the US has been the sole economic hegemon from the early 1900's and it won't change for another 50-75 years at the least.
Otoh China and India were amongst the poorest countries even 4 decades ago and both have grown at a crazy pace, unprecedented as it doesn't involve Oil or stealing from colonies or internal colonisation
GDP per capita means nothing if your elite individuals and the corporations they control own all the P.
How does it mean nothing? A higher output of production generated would mean there's more money generated by the businesses which benefits the state, and provides higher job opportunity.
It's big corporations which generate most of the production, always has been.
Incorrect. Most of their wealth is in stocks, which effectively means that it's circulating among the population. Accumulation of wealth gives the owner the perk of deciding what industry a large part of the country will spend more efforts on, like e-commerce or AI, electric cars or airspace.
Of course, sometimes (but not always) that means pulling resources from some other industries, and people working there are in for a bad day when it happens, but it's not like billionaires are sitting on hoards of bread, taking it out of children's mouths.
The crazy part of this is how much of this money never goes back to America at all.
Is America wealthy? Yes, absolutely.
Does it seem the average American is living a life that is 6 times better and more prosperous than the average Chinese or Indian citizen? I don't know.
Does it seem the average American is living a life that is 6 times better and more prosperous than the average Chinese or Indian citizen? I don't know.
6 times better than the average Chinese? Definitely not. Obviously salaries are way lower in China, but so is cost of living. India is a different story.
Cost of living for the average Chinese person is lower than that of the average American because the quality of life of the average Chinese person is lower than that of the average American.
No, the average cost of living is lower because wages are lower. Wages are also way lower in my country the Netherlands than wages in the US, but no way I'd say we have a worse quality of life. Average income doesn't paint an accurate picture.
Even if average quality of life is worse in China than in the US, that doesn't mean it's 6 times worse. That's a ridiculous claim to make. The average Chinese has a comparable life with the average American in terms of quality of life. They work regular jobs as Americans, go out for dinner and coffee, they do fitness and other hobbies, their life expectancy is almost the same as that of the US, etc. The difference between the 2 countries really isn't as extreme as you're making it out to be. It's not Afghanistan we're talking about here.
No, the average cost of living is lower because wages are lower.
No, cost of living in China is lower because the quality of life is lower.
Wages are also way lower in my country the Netherlands than wages in the US, but no way I'd say we have a worse quality of life.
That’s great, but I’m talking about China, not the Netherlands.
Even if average quality of life is worse in China than in the US, that doesn't mean it's 6 times worse. That's a ridiculous claim to make.
I would say it’s a perfectly acceptable claim to make, although the exact number is obviously purely subjective.
The average Chinese has a comparable life with the average American in terms of quality of life.
No it’s not. Compare the size of the average house in China (650 sq ft) to the size of the average house in the US (2200 sq ft), let alone the other specs of those houses. Compare where the average Chinese citizen purchases their goods (local markets, street markets, wet markets, etc.) to where the average American purchases their goods (massive department stores, massive grocery stores, Target, etc.) Even the poorest Americans would scoff at the idea of shopping at wet market. Compare the type of job the average Chinese citizen holds to that of the average American, and so on.
If we’re comparing the top 10-20% in each country, I would say the difference isn’t as drastic. But if you’re comparing the citizens in the 30-70% range, the difference is extremely significant. Just compare the number of Americans who immigrate to China versus the number of Chinese who immigrate to America. If the quality of life was comparable, you expect those numbers to at least be relatively comparable, but it’s not even close (even if you account for the home country’s’ populations).
their life expectancy is almost the same as that of the US, etc.
the life expectancy in the US is not lower due to a low quality of life. The life expectancy in the US is lower because we live an extremely unhealthy and extremely sedentary lifestyle, the latter being a sign of very high quality of life (i.e. convenience).
It's not Afghanistan we're talking about here.
I never said it was. The difference between the US and Afghanistan is even more stark.
The answer to your second question is most definitely yes. The US has huge inequality but the standard of living is still a lot higher even for the poorest Americans.
Yeah, man, me too. This is why the U.S government is famously not concerned about China. Sorry for the image; I really don't know how to respond to this one LMAO
That a country of 350 million people is outperforming 3 billion? It’s literally just perspective on how high the nominal gdp output of the US is (and by extension the nominal gdp per capita), I don’t know why that would be not allowed for comparison especially with the “China taking over everything” narrative that has been pervasive for like 2 decades.
If we use PPP then China + India is about 2.5 times US. Nominal GDP mostly represents the fact that people like trading and investing in US dollar, and China keeping their currency low to gain export advantage.
Those could change very quickly. If China one day decides to become the center of investment and consumption, like they used to be before the 17th century, US would clearly be marked as #2, maybe even #3 if India does the same. That could even be good for US due to the dollar no longer be pushed so high and it’d be more profitable to manufacture in America.
Yes everyone knows about PPP, the point is that the image is showing one thing and everyone else is clamoring for it to show another thing and saying it’s misleading because it’s not showing that thing they want. It’s not misleading, it’s showing one measurement of a complex topic.
To your other point China has been trying to desperately become a consumption economy for like a decade and it has mostly failed, so I don’t really know what you mean by “one day” when it already has. And in regards to investment, it will only be the “center for investment” when they don’t have a government that can seize your assets at will, i.e the end of the CCP as we know it. Until then it’s unlikely to happen
I’m not even disputing the entirety of what you’re saying, I’m just wishing people could stay on topic and actually engage with what’s being displayed or at the very least acknowledge they’re talking about a different thing
Gdp ppp only works as a comparison for how well people live in their own country. When it comes to global power raw gdp and gdp per capita show a better picture.
Resources cost almost the same globally, raw talents costs the same, most high quality technology and devices cost the same.
Thats why a country of 300+ million can own multiple carrier groups, control most of the worlds internet traffic, have huge influence while something like India can barely project power outside their borders.
This is hilariously dumb comment. How come nobody has brought this up to China yet? They’re gonna be pissed when they find out there was just this one simple trick to become the center of investment and consumption all along…
China faces a lot of structural issues to raise consumption, they also partly don’t want to do make the sacrifices required to start the transition, at least not yet. In a short comment I couldn’t write down all the analyses from economists like Michael Pettis, about both China’s huge potential and unwillingness to make the change. My comment was also not meant to belittle the US. Nevertheless, the fact that the usd has huge advantage and the cny is artificially repressed has to be pointed out.
It is comparable if you're speaking of significance in the data. If you're stating a wrong opinion, then the answer you're looking for is in the real world, where that data is comparable.
colony of ants is compared to a snake in many stories.. so are thousands of bees to 10s of hornets. what is your point? if the op wanted to compare per capita he would show that.
Nominal GDP comparisons are extremely distorted by currency manipulation such as that practiced by China. Their “actual” GDP is a lot higher than what it is nominally because China artificially depreciates and keeps their currency value low to make their exports more attractive.
That’s why there’s seemingly no growth in Chinese GDP since 2020 when that couldn’t be further from the truth. A way to get around this is by measuring in PPP to get rid of currency fluctuations.
If you take out currency fluctuations, the Chinese economy grew nearly 57% from 2020 to 2025 and the US economy grew 43% over the same period. India managed 81% growth.
Using purchasing power adjusted figures to assess military strength is problematic. As we've seen in Ukraine, the reason Russian tanks are cheap to purchase is because they're shit tanks.
Russia may have a larger military on paper, but in the real world they're ineffective, only able to capture 1% of Ukrainian territory in the last 2.5 years. The Italian military could've possibly won the war in that time.
Plus Russia can't maintain it, one of the major reasons the USSR collapsed is due to unsustainable military spending. Russia inherited most of its stockpiles from there, plus they've been neglected and left to rust.
Italy military is nowhere near the level of the Russian or Ukrainian army, who were both the most militarized nations of Europe before 2022. Italy has almost ten times less soldiers than Russia and is less than a fifth as big as the Ukrainian army, and their reserves are minuscule. In basically any equipment size Italy has MUCH less equipment than Russia with much of them not being really tested in actual combat with a near peer adversary. Western European militaries this days tend to very overestimate, with serious lacks of manpower and maintenance
No, the Italian military would’ve run out of bullets and bombs in a week and be completely overrun by Ukrainian forces if Ukraine bordered Italy. You vastly overestimate most European militaries.
Yeah, people forget about the 2023 offensive and the Kursk incursion, where it was almost daily videos of western tanks being shredded by Russian drones. Drones completely changed warfare, now tanks are extremely vulnerable in the offensive no matter what country they come from
There may be a universe where Russian tanks aren’t trash but the doctrine and supporting equipment are. Russians haven’t suitably adapted to their combat environment to overcome the Ukrainians at this point and that should be the national embarrassment.
It can be the case, obviously it needs a more nuanced calculation for something thorough - for example raw resource inputs are usually global commodities and need to be priced at that, but labour and energy specifically can be discounted to local rates
Growth, especially for economies which are not extremely trade-oriented, is best looked at using PPP to avoid the error of currency fluctuations masking growth. Many people make the mistake of thinking China’s economy is stagnating or falling behind the US in terms of growth when China actually grew more over the same period.
Trade doesn’t make a massive proportion of either the US or Chinese economy so arguably PPP is a more accurate assessment of the size of their economies. A country that didn’t trade at all would mean their nominal GDP was meaningless and their true GDP would be PPP.
Can you give me a breakdown with regards to what sectors China's economy grew in, and also correct for added debt in that time? If their debt (central + provincial + state owned enterprise) is growing at a faster rate than their rate of growth then they can't sustain those industries, they're just hoping they can get away with dumping for long enough that others lose their industries and know-how so they can establish a monopoly.
The Chinese economy is far more export oriented and the consumer side of their economy is actually the one that's stagnating more than ever, so it's also not a one-to-one with the USA for how much PPP will distort things either.
Not sure you really want to criticise China for debt-led growth when that’s exactly what the US has done since 2020 too.
China’s economy is less export oriented than you think. Only about 20% of China’s economy comprises of exports compared to around 11% in the US. They’re not large portions of either economies.
If you broke it down by individual sector, 20% is close to the largest contributor in most countries, usually in Western aged countries this is what healthcare + elderly supports are.
There are differences in severity of debt led growth, and my critique of China isn't praise of the USA. Chinese debt levels when you tally them up are substantially higher than any western country, like more than a factor of 2, and we're not even getting into private debt, where companies and households have become completely ossified because of the ongoing real estate crisis. It doesn't help that post pandemic Xi Jinping doubled down on supply side growth instead of demand side growth. China has a crisis of oversupply (while America is the example par excellence of a crisis of overconsumption).
Youre being ideological if you can't see that China has substantial economic issues that have already started to kick in, and crucially, which they can't improve on unless AI hits AGI, and I would call you naive if you think anyone but the super wealthy will reap the benefits of AGI anywhere globally, so it's not a place where the goalposts can shift.
Debt by itself is not bad. So long as your economic growth in addition to inflation is higher than the interest rate you’re paying on your debt you could have as much debt as you want and it really wouldn’t matter.
Chinese 10-year bond yields are still barely even 2% when their economy is growing at upwards of 5-6% every year. It is really not as crazy a concern which is why China is still comfortable borrowing so much. China’s economy is still growing at extremely high rates and whilst deflation is a concern, it is a result of overproduction and literally being too good at making shit cheaply, a problem most Western economies wish they had.
Western countries, on the other hand, have much more cause to be concerned. Their 10-year bond yields for some are upwards of 3-4.5% with completely anaemic economic growth to show for it. Inflation also isn’t high enough to just inflate away the debt and that’s not really going to be an option for Western democracies.
The difference is that Chinese debt is fuelling productive growth in construction of infrastructure —though there are valid criticisms that in the housing sector they over leveraged—and investment in key areas such as tech, automobiles, manufacturing, defence and R&D.
Western debt is primarily to pay off their absurd social welfare programmes and healthcare systems which are completely unproductive endeavours.
China borrows to invest in technology, R&D and infrastructure. Many countries in the West borrow to keep the lights on and give their elderly and sick population handouts. One is not the same as the other.
If you think China’s debt problems are bad, you’ve not been paying attention in the West.
Again, the hope seems to be that AI and robots will magically solve their problems, but no sane country is going to allow Chinese robot manufactured products in, even if they are able to pull it off, because it would fundamentally undermine their ability to have an economy, and the lives of Chinese people *still* won't improve, because the government (in accordance with your thesis) is not motivated to improve their lives.
Btw, not having existing social programs actually means that China has less to cut if things actually get bad, it means they don't even have policy levers to recover from economic meltdown. Here's a two lines of debt from 2015 to now for China and USA (since I can't put in a table for some reason)
Year: 2015; Country: China; Total Debt/GDP = 227% vs USA 250%
Year 2024: Country: China; Total Debt/GDP = 287% vs USA 250%
And here's the annual growth in debt:gdp since 2015 (and yes, debt isn't bad if it's resulting in multiplicative growth, but debt:gdp is this exact ratio):
China: +6.7 percentage points per year (this is whole economy, including private)
USA: 0.0 ppts (essentially flat over the decade)
France: +2.1 ppts per year
Canada: +1.4 ppts per year
The reason China's bonds are low is because of the deflation that's expected in the economy, which is a lot worse than having higher bond yields. If it wasn't for Trump actively trying to turn the USA into China, the American outlook would be obviously superior to the Chinese.
This is all uncompressed Chinese GDP data, yes reporting has gotten on average better since Xi came into office in some ways (it's more closely aligned with Li Keqiang's estimation methods) but it's also overly smoothed, and there's the general sense that in bad years the overreporting is higher than the underreporting in good years. When you consider that the best case scenario for Chinese GDP is really 70% of what's reported, the total debt:gdp figure balloons past 400% and if the overreporting is even 60% it goes past 500% - this would put it almost exactly on par with Japan at the peak of its bubble with 3 decades of economic flatlining that has followed (their interest rates on the debt stayed low too!). Even without this, what we know is that China is more indebted than the USA now.
You come across as extremely supply-side brained. The dollars spent on healthcare and low-income support flow almost guaranteed directly back to the economy, whereas giving subsidies to corporations often results in capital misallocation, because decisions are made from top down as opposed to bottom up (entirely ignoring demand side of economics). Just look at the ongoing food delivery wars and electric car wars in China where companies are operating at massive losses hoping to survive one another because they've built up too much capital they can't allocate efficiently, because of government choosing winners previously. The only fix is for the government to crack down, which they're trying to do, but this doesn't resolve the problem, instead it's playing whack-a-mole with ever-more complicated webs of subsidies and market distortions.
It’s not distorted, they’re just two different metrics to measure two different things and to offer different perspectives on something as complex as a nations economy
Using PPP introduces other, severe distortions, and isn’t as valid as the loudest Redditors seem to think. Redditors prefer to use GDP, real GDP, GDP per capita, and GDP PPP in inappropriate situations, seemingly to confuse anyone who doesn’t understand what is being talked about.
There are no objective ways to compare economic growth. “Purchasing power parity” is a construct that falls apart when you realize that regardless of how you adjust the currency value, it still isn’t comparable because you simply cannot purchase the same things in the two places. For example, US defense contractors sell equipment to the US military that I’m sure China would be willing to spend virtually any amount of money on, but Lockheed and Raytheon won’t sell to them no matter what. Thus no amount of yuan is equivalent to any amount of dollars, no matter how you turn it, and such comparisons are always apples to oranges.
I mean, obviously, they are different economies after all. But you can find roughly equivalent products in most economies. Spa service in the US is probably not going to be completely and utterly different to spa service in China.
Economists don’t tend to get lost in the details because nothing is perfect and nothing is perfectly comparable but PPP absolutely does not fall apart because of this. It’s a known limitation that it doesn’t take into account the quality of goods and services provided but this can usually be ignored for two economies of a decent development calibre.
The differences in the types of products and the quality of them are far more preferably limitations than what nominal GDP has in that it completely masks and distorts GDP for countries that deliberately manipulate their currency. A country could be seen to grow at absurd rates if they appreciated their currency relative to the USD even if they experienced no real growth at all in their own currency which is what matters for economies which mostly rely on domestic consumption, investment and production—which is most economies.
The Big Mac scale is one measure. I believe a great many identical items are sold everyday globally. That’s how PPP works. Walmart sells same products in China and US. You intuitively understand they are priced differently
Services are also priced differently. Spotify is cheaper in poorer countries than richer ones, for example. Hotels and spas are cheaper in poorer countries than richer ones.
I know how PPP works. My point is that PPP isn’t the whole story, because there are fundamental differences in what can be bought, not just in how much things cost. And some of those items, like military equipment, are extremely important when you’re trying to evaluate relative power.
Sorry. I have had to explain PPP to college professors so I put on my explainer hat. You are so right that economics is just part of the picture. China appears more cohesive in the general public. China appears more sure of their political structure and more confident of their own future. The US feels behind in these areas. For a whole, Xi was talking about when China would surpass the economy of the US. Then came 2016 US election and first trade war. China moved from horse race to cautionary posture. Then Covid. As trade took a hit, China crafted their own project 2025: replace western technology with domestic versions. Now US is signaling instability with tariffs in a way not seen in decades. XI now sees the zen of second place. Soon India will be 3rd then Germany, California Japan,
The problem is that China shot itself into the foot with their population planning policies. By the time they actually come close to rivaling the US on the international stage, the effects of that will be in full swing, and are almost certain to drag them back down. And since they are doing nothing to encourage immigration, there is no solution in sight.
Right! Many population miscues. You’re right about very limited immigration. I have not solved the global decline in birth rate so far. But I sin for a right sized global population of about half of what we have.
China’s nominal GDP is likely inflated. Provincial governments report their own growth figures with almost no transparency, and they have strong political incentives to overstate performance. This issue is so well known that the National Bureau of Statistics has openly acknowledged it in the past, introducing reforms and statistical “breaks” to adjust for inflated provincial numbers.
Independent research backs this up. Studies from Brookings and the NBER suggest that official growth has been overstated by roughly 1.5–3 percentage points a year in recent decades, with the economy’s true size potentially 12–16% smaller than reported. More recent alternative estimates, based on tax receipts, electricity use, trade data, and even satellite imagery, put China’s 2024 growth closer to 2–3%, versus the official 5%. Analysts like Rhodium Group have gone further, arguing that China’s economy may have contracted in 2022 despite the government claiming 3% growth.
The PPP is innacurate for china, as china barely has any government debt which is important for PPP, but their provincial debt is astronomical, almost as big as the american debt...
But the problem with PPP and why it's often not useful in these comparisons is yes, Chinas economy can be way, way larger than the US's, but if that's billions of people getting haircuts (for example), that PPP number is pointless/meaningless. 1B USD worth of people getting haircuts is not as valuable as 1B USD in shipped software, for example.
This is why GDP is literally the best way to compare the value coming out of various countries to measure their actual "worth," and why the US has been number 1 for a long, long time, even though Chinas Economy (and thus PPP) surpassed the US's a long time ago in size.
The first comment insinuates that PPP is how you measure their output by getting around GDP manipulation.
I said that's WRONG, PPP is not how we can meaningfully compare two countries economic output and in fact is fairly meaningless in this context. Their economy "grew" but did it "add value" in the same way the US did? No. Hence the lower GDP.
I mean the US is worth 30 trillion while China is worth $18 trillion. The US added to its gain by adding value to its economy, not by expanding it with population. It's really not rocket science.
No? It is not our job to determine what is or isn’t valuable because valuable is completely subjective. Or do you think we should strip out components of GDP that you deem aren’t valuable? What if I deem the billions spent on Netflix subscriptions and Starbucks in the US compared to China as not valuable and strip them out? It’s nonsensical to bring what is or isn’t valuable into GDP.
$1B spent on haircuts is still $1B to the economy which results in tax receipts, growing businesses, consumer satisfaction and a healthy injection of funds. This is no different to shipped software. I would actually implore why you think shipped software is more valuable than local services to local people.
Software that’s shipped is usually done so via large corporations that tend to horde this money and file them off in offshore accounts to avoid tax whereas smaller businesses don’t or can’t do this. So will the government even see an increase in tax receipts from the software? Arguably not. So how could you claim it’s more valuable so objectively?
GDP does not measure “actual” worth. That is nonsensical. Your definition of “actual” worth is completely subjective and there’s no metric that’ll measure that for you.
I’m not saying haircuts or other local services don’t have value, they absolutely do, and they’re part of GDP. My point is that PPP GDP mainly measures domestic purchasing power, not how much of that output translates into international economic weight.
If a large share of PPP GDP comes from non-tradable services like haircuts or local dining, that purchasing power can’t be used to buy foreign goods, invest abroad, or project economic influence. Nominal GDP, calculated at market exchange rates, is far more relevant for comparing economies on the global stage, because it reflects what a country can actually command in international markets.
That’s why the U.S. still ranks #1 by nominal GDP, even though China surpassed it in PPP years ago.
You can't ship the billion haircuts for your billion population. But you CAN ship software. Get it?
Yes, I don’t think anyone was refuting that. If you want to interact with the global economy then sure you should use nominal GDP but most economies are overwhelmingly domestic-focused and therefore nominal GDP is a lot less relevant and indicative.
The most accurate way to assess how large an economy that mostly comprises of domestic consumption and investment is by using GDP PPP. China can buy more Chinese goods than the US can buy American goods and both economies are largely made up by domestic consumption and investment. Exports, imports and foreign investment make up a minority of their GDP.
International markets are a small fraction of most major economies. PPP is extremely important in assessing a country’s growth, for example. Nominal GDP would suggest China has barely grown since 2020 but if you asked someone who lived there you’d realise that’s just not true.
Agwain, while PPP is useful, Nominal GDP adjusted for current exchange rates will always be the best metric to compare economic output of Nations and that will pretty much never change. Unless you come up with some new economic theory I'm unaware of.
Only if you are comparing them based on how many international products each economy can buy which is a narrow metric. What if you want to compare how many factories can be built domestically or how many domestically built tanks, warships or other goods can be bought?
How are you defining economic output? How can GDP be the best metric if you haven’t even defined that? Who is consuming this output? Foreigners or your domestic audience?
There’s no agreeing to disagree here. There is no “best” metric. That’s a childish mindset. The entire reason we have different metrics is because there’s no best metric.
If you don’t define the parameters of what you even want to measure, you won’t know which metric you should use.
1B USD worth of people getting haircuts is not as valuable as 1B USD in shipped software, for example.
On the other hand, 1B USD worth of haircuts in China is way more haircuts than 1B worth of haircuts in the US. Why would a Chinese haircut be worth less than a US haircut?
If you generated trillions of dollars internally in economic activity through haircuts, it's not the same value to the rest of the world as billions in activity surrounding something more valuable that can be exported (for example).
So the size of their economy internally may be huge (and thus their PPP is larger than the US), but the VALUE of their economy is not nearly as high as the value of the US economy globally. Hence the much lower GDP even though they already have the largest economy in the world.
Anyone can have the largest economy if you have literally 1B+ people doing stuff. But is that stuff... Valuable? Well, in the US, very much so. In China, not as much. Hence the lower economic output even with higher raw economic activity.
China's gdp in 2020 was 6.5 times of India's (17.5T vs 2.7T). Now it's 4.5 times of India's (19.23T vs 4.19T). China's economy still dwarfs India's economy but the gap closed a bit in 5 years.
Afterthought: The raw value graph on the left shows 0.68 trillion for China + India in 1990. This works out to approximately -0.1674911 as shown on the log scale graph on the right. We aren't plotting negatives on the log scale.
You're not supposed to transform the values to log. You want the scale to be log so you can show the growth rate and have sensible comparisons even when the values are small (left side). The lines should be more or less straight. Here's an example
You're wrong. Log graphs handle growth rates much better. Here you cannot even tell the order of magnitude difference at the beginning of the timeline.
I’m in China now, and have been to 10 major cities. The scale of the economy here is insane. The amount of production, r&d, infrastructure, services blows the us out of the water from what I see. Prices are just 30% of American prices so the US gdp will be higher for a long time but there’s just so much more getting done by so many more people here.
The "Chinese dream" is to get an education and move to America lol
Prices are 30% because they get paid less than half as much as the Average American.
Biggest shame to China is Taiwan, they have a fraction of the population and size and yet they managed to outperform them at every level since the 90s. Even when comparing only to Big Chinese cities...
If prices are 30% of what they are in the US and your salary is 40% of what it is in the US that would make your life more affordable. People save a lot of money in China but they are also just more frugal than Americans.
PPP is good for improving comparisons on standard of living but not for raw economic and financial power. Sure, bread and milk might be cheaper in China but if you want to buy an oil tanker or conductor foundry that still costs the same everywhere.
This graph isn't claiming anything, from what I can tell. It's like if it showed the average ages of citizens and said it's a bad measure of happiness. Like, sure it's a bad way to measure something it's not trying to measure
Anything. GDP is a horrible measure of anything. The moment you graph it, you’re inviting people to infer meaning or narrative from it (growth equals progress, bigger equals better etc). That’s the sleight of hand. But GDP doesn’t measure anything well. Wealth, wellness, sustainability, fairness, prosperity. It just counts transactions whether they come from building schools or cleaning up oil spills. The act of treating GDP as significant gives it value it doesn’t deserve.
Everyone always tries to shit on GDP then comes up with a new "better" metric for measuring standard of living that just ends up correlating 90% with GDP.
Everyone always tries to shit on GDP then comes up with a new "better" metric for measuring standard of living that just ends up correlating 90% with GDP.
Nominal GDP is a very bad metric to use to compare the size of different economies. You are saying an apple that costs three times more is actually three apples.
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u/hey_you_too_buckaroo 3d ago
The entire world basically invests in the US, stores their money there, and uses USD as the global currency for everything. That gives the US tremendous freedom to print as much as they want without inflation, keeps prices low for their citizens, and inflates their own salaries and assets. It's a crazy special case and hard to compare other countries to.