NEW WORLD ORG CHART

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NEW WORLD ORG CHART  

Get ready for a shock, America: You’re now No. 2. That’s right, the runner-up. A silver medalist. In 2014 China passed the US to become the world’s biggest economy, by one measure.

Adjusting figures for purchasing power parity, China in 2014 produced $17.6 trillion in goods and services, according to the International Monetary Fund. The US produced $17.4 trillion. The last time the US was second in world economic rankings presidents still wore beards.

This “could very well be the Chinese century,” Lloyd Blankfein, the chairman and chief executive officer of Goldman Sachs, said at the DealBook Conference in New York recently.

The caveat here is that purchasing power parity isn’t a perfect way to compare gross domestic products. It adjusts for the fact that prices are different in different countries. A Big Mac in China costs a lot less than the same burger in the US. So PPP gauges how much stuff a nation’s people and companies could buy at home.

By the more traditional nominal GDP measurement, the US is still way ahead. It annually produces almost twice as much as China in terms of world market value: about $17 trillion versus $9 trillion.

But PPP is a useful gauge of how an economy affects actual people. It reflects what’s happening to their standard of living. In that context China’s rise is good news. It’s a powerful indicator of the ascending world middle class.

Middle classes are poised to explode in developing nations in coming years, according to the National Intelligence Council’s “Global Trends 2030.” The number of people with middle-class incomes will go from 1 billion to more than 2 billion in the next 15 years, according to the NIC.

This could represent a tectonic shift in affected societies.

“The hundreds of millions of entrants into the middle classes throughout all regions of the world create the possibility of a global ‘citizenry’ with a positive effect on the global economy and world politics,” writes the NIC.