Minxin Pei writes: Few countries would turn down the title of world’s largest economy. You can count China among them.
Only the United States has enjoyed the immense power and prestige conferred by this position in the last 140 years (the U.S. surpassed Great Britain as the world’s largest economy in 1872 and has held the spot ever since). But last week, the Chinese government reacted with thinly disguised animosity to an authoritative economic report announcing that China would overtake the United States in 2014 as the world’s largest economy in terms of purchasing power parity (PPP).
According to the International Comparison Program of the World Bank, in 2011, the Chinese economy totaled $13.5 trillion in purchasing power parity. It is on target to grow 24% between 2011 and 2014, compared to 7.6% cumulative growth for the U.S. For its part, the U.S. had $15.5 trillion in PPP in 2011. The Chinese economy at the end of this year is expected to have $16.7 trillion in PPP, slightly bigger than the $16.6 trillion projected for the U.S.
Before the release of the latest World Bank report, the consensus estimate among economists was that China would surpass the U.S. as the world’s largest economy in PPP terms in 2019. That China has managed to catch up with the U.S. five years sooner is largely due to the effects of the financial crisis and the Great Recession, which caused anemic growth in the U.S. but affected the Chinese economy only moderately.
Instead of bragging about its coronation as the world’s No. 1 economy, China first tried to delete the reference to the new PPP estimate of its economy in the World Bank report and then all but suppressed its coverage within China’s domestic media.
On the surface, Beijing’s unfriendly reaction makes no sense. Ever since the Tiananmen crackdown in 1989, the Chinese Communist Party has relied on economic growth as the most important source of its legitimacy. Being crowned the world’s largest economy should only help reinforce the party’s claims of credit for bringing prosperity and international respect to China. And Chinese foreign policymakers have been skillfully playing the expectations game around the world. By pointing to the inevitable rise of China as the world’s largest economy and the relative decline of the U.S., Beijing has had considerable success in changing the economic and geopolitical calculations in many capitals, notably in Africa, Latin America, and the Middle East.
So, why does Beijing dislike being called No. 1 now? [Continue reading…]