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Well, most people that I have talked to, they tell me that China already has the biggest economy in the world.|
The definition of the GDP is the product of all the goods and services being produced in the country.
The problem with the current Chinese GDP calculations is that the calculations do not take into account the fact that many goods and services are free or have low subsidized prices in China. For instance, some Chinese people may get a free apartment rental, and that does not appear in the Chinese GDP calculations. Another example, a bottle of Qingdao beer costs 5 dollars in a restaurant in America, but a bottle of Qingdao beer may only cost 25 cents in a restaurant in China, which would cause the calculations of the Chinese GDP to be too low. You would need to calculate a bottle of beer in a Chinese restaurant to be worth 5 dollars to the GDP of China, and not to be worth 25 cents to the GDP of China.
If the GDP of China was calculated correctly on the basis of the real worth of all the goods and services in China, the GDP of China today should be nearly 2 times bigger than the GDP of the US already.
On that basis, the real GDP of China should be 3 times the GDP of America in about 5 to 6 more years.
In other words, by 2016, China should have reached the same level of development as South Korea in 1996, which means that the average GDP per capita in China should be two-thirds of the GDP per capita in the US.
As China has nearly 5 times the population of the US, you can calculate that 2/3 times 5 equal 3.33 times the GDP of the US.
The real GDP per capita of China should be 2/3 of the real GDP per capita of America by 2016, and the real GDP of China should be 3 times bigger than the GDP of America by 2016.
Of course, as for the GDP of China based on the nominal exchange rate of the Yuan, that may take longer than 2016 to become 3 times bigger than the GDP of the US.
It all depends on Chinese government policies. If the Chinese government had left the Chinese Yuan free to trade on the exchange market since 2007, the Chinese Yuan would now have appreciated to 3 Yuan to 1 dollar already, which would have more than doubled the GDP of China based on the nominal exchange rate of the Yuan.
And the Yuan being free to appreciate on the exchange market, eventually, the Yuan would appreciate to 1 Yuan equal 1 dollar before the year 2020, which would make the GDP of China based on the nominal exchange rate of the Yuan become 7 times bigger automatically without any real increase in the production of goods and services in China.
In other words, if the Chinese government let the Yuan appreciate in value to 1 Yuan equal 1 dollar, the GDP of China would automatically change from 4.7 trillion dollars to 32 trillion dollars without any real actual increase in the production of goods and services in China!