Recent figures confirm that China and the United States each registered significant economic advances in 2005.
Not only did China's economy again grow at a nine-percent annual rate, but official statistics reveal that the economy is considerably bigger than previously thought. The Beijing government says that it severely underestimated the size of China's service sector and thus it revised economic output upwards by $285 billion. That statistical error is a very big number, equal, for example, to the gross domestic product of Indonesia or Austria, a mid-sized European economy.
With the revised statistics the Chinese gross domestic product is just under two trillion dollars. That propels China past Britain and France, making its economy the fourth biggest in the world. The only economies bigger are the United States, Japan, and Germany. Goldman Sachs brokerage says if current growth rates persist China's gross domestic product will overtake the United States by 2040. Peter Morici, a professor of business at the University of Maryland, doubts that will happen.
"China will continue to grow a few more years at that (nine percent) rate. But my ten year forecast is for it to gradually slow to about six or seven percent a year. One reason is that its growth is so much driven by exports," he said. "And who will consume all those exports?"
Currently the U.S. economy is six times bigger than China's. The U.S. gross domestic product is well over $12 trillion. This week the Commerce Department issued a report saying that the U.S. economy grew at a 4.1 percent rate in the third quarter of the year. By contrast Japan grew by less than two percent and Germany by less than one percent.
Given its huge size, the nearly four-percent growth the U.S. economy will have registered in 2005 is an enormous number. The advance in GDP is expected to be nearly $700 billion in 2005. That is an amount equal to the entire gross domestic product of India of $650 billion or Mexico at $700 billion.