Well, it’s finally happened.

If adjusted for purchasing power parity (PPP), China is now the world’s largest economy, making the United States number two for the first time in 142 years. If you put the currency of both countries on level footing, China’s economy is worth $17.61 trillion as compared with $17.4 trillion for the U.S.

According to Peter Schiff, in less than 10 years China will overtake the US on a purely dollar level as well. They will actually surpass us with our own currency. I agree with this prediction barring some kind of major war or other world-wide catastrophe.

China already surpassed the US in terms of global trade last year. China just posted its largest trade surplus, ever. At the same time, the US posted its largest trade deficit in manufactured goods, ever.

As soon as China dumps the US dollar as their reserve currency (once they buy enough gold, which they are) and eliminates their currency peg, it’s going to be all over. The world rule of the US will end and the defaco rule of China will begin. Right now China produces the things we can’t and lends us the money we don’t save. Soon that will all change.

China has a lot of problems. Portions of its population are upset at their lack of freedoms (as we see protests in Hong Kong) and they have the largest real estate bubble in world history to deal with soon. Regardless, China will overcome these problems just as the US overcame depressions, civil wars, and world wars on its way to becoming the ruler of the world.

Get ready, Westerners. It’s going to be a wild ride over the next 10-20 years.

5 Comments on “China Overtakes the US as the World’s Largest Economy

  1. Just my opinions:

    1. Keep any long-term money invested outside of the US or Europe. Invest in other countries, commodities, etc.

    2. Look for ways to sell products or services to middle-class Chinese. (Ideally online.)

    3. Keep an eye on countries that are benefiting from China’s rise (SE Asia, Australia, etc).

    4. If you’re older, like over age 55 or so, don’t worry about any of this. But if you’re young, this is something you should to pay attention to and be aware of, since it will likely affect you directly in your lifetime.

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