Chinese Economic Data: More Tall Tales
Derek Scissors /
The Conference Board, a global research association, made a splash with their 2011 global outlook. The group’s most interesting claims are that emerging markets will drive “global growth” and that China could pass the U.S. on one measure of economic size as early as 2012. The Conference Board is making two mistakes many observers make, and which the media gladly eats up.
First, the Conference Board projects China could have a larger economy than America when adjusting for purchasing power parity (ppp). PPP is a way to account for different prices across countries. For example, most things are cheaper in China than the U.S., so a dollar’s worth of money, or 6.7 yuan, generally buys more in the PRC than the U.S. (more…)