Why the Chinese economy is considered the largest

The Chinese economy escalated the last few decades. It holds the reputation of being the second largest economy in the world by nominal GDP and the largest economy according to the International Monetary Fund (IMF) by its purchasing power parity (PPP). This is due to the governments full on support for economic activity.

When it comes to trade, the Chinese economy outperformed the United States by roughly 100 to USD 4.2 trillion in only three decades. In 2001, it became affiliated to the World Trade Organization. Chinese exports make up around 55% of machinery and electronics, while Europe and North America have an export share of 23% and 24% respectively.

Good old days of the Chinese Economy

China’s economic success can be traced back to its developing history. In 1976, Deng Xiaoping is responsible for reshaping the country’s economy by proposing bold reforms. For the next 2 years, China already ranked ninth in nominal GDP with USD 214 billion by starting the program of economic reforms.  Years later it became a part of the World Bank and IMF (1980).

China affecting the Global economy with its debts

If the Chinese economy sharply slows down, the whole world will feel the outcomes, especially commodity exporters in Southeast Asia, Australia and Brazil. 

Last January 2016, China’s stocks were at its lowest but lately recovered by rising up to 19 percent. This is due to the rising commodity prices. Last April 2016, China reached its total debt by 237 percent of gross domestic product. This could potentially slow down the Chinese economy this 2017. However, according to their government, this burden can be prevented by focusing on the unproductive use of debt instead of socializing the burden itself.