What’s the real size of China’s economy?

(Big time) I’m on my way, I’m making it (Big time)

(Big time) I’ve got to make it show, yeah (Big time)

(Big time) So much larger than life

(Big time) I’m gonna watch it growing (Big time)

– Peter Gabriel

In May, the World Bank concluded one of its periodic International Comparison Program (ICP) assessments – the price survey which “officially” determines purchasing power parity GDP.

Like college rankings, the league table of the world’s largest economies shifted just enough for the obsessives to notice while springing no real surprises. Harvard will be Harvard and whether Princeton ranks above or below Yale this year is largely irrelevant.

For the obsessives, China’s lead versus the US expanded by 5.6%, India inched closer to China, Japan kept its ranking while sliding down a tick, Russia moved ahead of Germany, France ahead of the UK, Indonesia tumbled two places and Brazil rose one spot. The top 10 remained the top 10.

While Russia fans can beat their chest over a 13% increase in PPP GDP and the British may fret about dropping out of the top 10, all said, the latest ICP did not produce any remarkable revelations. Nor should it have.

Periodic pricing surveys are necessary to calibrate and maintain the accuracy of PPP adjustments. However, if they result in significant shifts, either too much time has elapsed between surveys or methodologies have broken down.

The ICP is a massive undertaking. According to The Economist, World Bank researchers visited 16,000 shops in China alone to collect price data. The latest ICP assessment collected data in 2021, four years after the 2017 survey. And the conclusion is that China’s GDP was undervalued by US$1.4 trillion pushing China’s 2022 PPP GDP from 119% of the US to 125%.

Accordi