Is China’s economy ‘ahead’ of America’s?

Comparing the size of countries’ economies is a popular sport, and a lot of people are very invested in the outcomes of those comparisons. For example, I see a lot of people passing around charts like this one, claiming to show that China’s economy has fallen behind the US’ since 2021:

Here’s a more detailed version, from Jason Douglas and Ming Li in the WSJ, showing how forecasts of the sizes of the two economies have changed over time:

In Bloomberg, Hal Brands cites this data to support his argument that the US is still ahead of China in terms of global power:

So if you just look at this data, you might get the impression that China’s economy is falling behind America’s and will fail to catch up in the future. But then if you read the news, you hear that China’s GDP is growing at a rate of “around 5%”, while the US grew at only 3.1% in 2024. That’s a strong year for the US, but it’s not clear how China’s economy could be falling behind America’s if its growth rate is higher!

The discrepancy here actually has nothing to do with whether or not China’s GDP growth is overstated. Yes, it’s possible that this is the case — for example, Rhodium Group guesstimates that China’s actual growth in 2024 was under 3%. But the charts above actually take the Chinese government’s 5% figure at face value. So why do they show China falling behind America?

The actual reason for the discrepancy is that there are different ways of comparing GDP. The two basic measures are:

1. GDP at market exchange rates, also called “nominal”
2. GDP at purchasing power parity (PPP), also called “international dollars”, also called “adjusted for differences in the cost of living”

If you use the first of these measures, you see China’s GDP falling behind America’s,