It is reported that China economy is now nearly half as big as the US economy. Its economic growth figures suggest that China could become bigger sooner than previously thought.

According to preliminary estimates, China GDP in 2011 was CNY 47.156 trillion which at the current exchange rate of 6.3138 translates into roughly USD 7.47 trillion.

By comparison, tomorrow GDP report for the United States will likely show that 2011 GDP was roughly or slightly over USD 15 trillion. That means that China economy is now nearly half as big as the US economy.

This in turn means that China economy could become bigger even sooner than previously thought. If the economic growth gap is 6% per year and real appreciation is 2.5% per year than that would be sufficient for China's economy to become bigger by 2020. If the growth gap and/or real appreciation is closer to the average rate for the last decade and it could happen even sooner.

It is true that per capita income in China would still be a lot lower since China's population is more than 4 times as big. And in per capita terms, China might never surpass America. However, the fact that average income is so low is reason to believe that the catch up effect will continue to fuel growth in China.

And so note that per capita income of one fourth of the US level means that it would still be a lot lower than in the other majority Chinese countries (Hong Kong, Macao, Taiwan and Singapore).

(Sourced from www.csmonitor.com)