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Michael A. Levi

Why the Chinese economy still lags behind the US

Published on May 16, 2014 11:06 PM
A worker at a Chinese car factory in Hefei, Anhui province. The attractiveness of Chinese and American markets to foreign firms depends on the profits to be made in international terms, not as measured by the workers' domestic purchasing power. -- PHOTO: REUTERS

A REPORT last month that China's economy will soon become the world's largest has sparked worries.

Normally calm observers are taking the news as a sign that China is overtaking the United States as an economic power.

But much as counting warships or troops often provides a misleading measure of military might, tallying up gross domestic product (GDP) - the figure behind the latest headlines - yields a warped picture of China's economic rise.

By most meaningful yardsticks, China is still less economically powerful than the US.

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