China's Measured at Today's Prices

For a country that is growing comparatively fast and very highly populated, the most appropriate measurement of China's Gross Domestic Product remains an unsettled matter for a number of dispassionate economists. News articles in recent years have suggested that that China's GDP has been underestimated and that the economy is therefore substantially larger than official statistics indicate.

Eduardo Porter mentions here, that a crucial weakness in the conventional estimates failed to take account of the price changes in the 1980s makes it clear that the economy in comparative terms is substantially smaller. Comparing against the most updated prices in China shows that the Chinese economy is indeed large but is not as close to other economies whose size is measured with more recent prices. From this situation, it is clear that considering Purchasing Power Parity (PPP) is not an abstraction and ought to be taken into account if meaningful comparison of economies is to be used in public discussion. It is also clear that future demand for energy in China would probably be higher than anticpated to ensure that it maintains the level of expansion as it is still very efficient. On the positive side is that fact that the need for an effeicient alternative to petroleum remains in the comercial intrest of both china and India.