Ye Tan: With Purchasing Power Parity, China's GDP Will Soon Become The World's Number One.

The good news is, China GDP In two consecutive quarters, it surpassed Japan to become the world's second; the better news is that it will be converted next year. purchasing power parity The total volume of GDP in China is likely to go up to a higher level. In the past few years, there has been an endless stream of good news. China replaced Britain in 2005 as the fourth largest economy in the world. In 2007, it surpassed Germany to become third. If purchasing power parity is used, it may not have to wait until 2020 that China's total GDP will exceed that of the United States. The most optimistic estimate is that it will overtake the US in 2012. World first 。

The good news is not surprising.

We are giants on GDP, dwarfs of national wealth, dwarfs in the market system. The total number of GDP made Chinese people out of poverty in the 80s of last century. However, the increase in total volume in recent years did not bring about the adjustment of economic structure, but made the gap between the rich and the poor increasingly severe.

Starting next year, China will participate in the new round of world bank organization's international comparison project (ICP) for the first time. That is to say, through purchasing power parity, global GDP will have more accurate measurement standards to facilitate comparison among countries.

Abstruse questions can be simplified. At present, the world's Big Mac index is defined as the exchange rate based on the Big Mac hamburger sold in McDonald's fast food chains. The same big Mac, if sold in the United States, sells 2 in the United Kingdom, for the Big Mac hamburger, the real exchange rate between the pound and the US dollar is 1.25; if sold in China for 10 and sold for 2.5 in the US, then the RMB will be 4:1 against the US dollar, and 4 yuan RMB will be used for 1 dollars in the US $2.5.

In the middle of December 2007 and the end of February 2008, the World Bank released the preliminary report and final report of 2005 global international comparison project. According to the survey data of 11 cities in China (Beijing, Shanghai, Chongqing, Dalian, Ningbo, Xiamen, Qingdao, Harbin, Wuhan, Guangzhou and Guangzhou) and other relevant statistics, the purchasing power parity of RMB in 2005 was 1 yuan equals 3.45 yuan, equivalent to 42% of the current exchange rate 8.19.

Nothing has been done and money has come from the sky. China's GDP has increased by nearly half. The domestic media at that time declared that the world bank admitted that GDP overestimated 40%. That is because the purchasing power parity estimated by the previous world row is quite out of line. In 2005, China's purchasing power parity was about 1 yuan, which equals 2.08 yuan, equivalent to 26% of the current exchange rate, and China made 3/4 more GDP. {page_break}

Such wealth is illusory. Don't take it seriously. RMB can not be freely convertible, you take 2.8 yuan, want to spend 1 yuan dollars abroad, no one will talk to you, will only feel that your brain is sick.

The tax behind the goods will greatly weaken your sense of wealth. At present, the General Administration of Customs has increased taxes, and Chinese tourists will pay 1000 yuan RMB for import of apple iPad, which is worth thousands of yuan from abroad. Not only the 5000 yuan restriction of foreign shopping, but also the purchase and purchase of cars, the overlapping taxes and fees will be lost. Moreover, the price of China's important products is not entirely priced by the market, and is not comparable to the products priced in the full market. Monopoly dividends and erroneous taxes often distort the prices of Chinese products. Moreover, the cost of resources, environment and so on by China's GDP is also excluded. Until one day the global carbon tax is imposed, the total amount of GDP in China will drop sharply.

The fictitious economy of emerging market economies is not developed, and the total amount of money is not as good as that of developed countries, or even in a tight state. Before the implementation of the market economy in China, an apple costs only a few cents, and in accordance with purchasing power parity, the yuan is far more valuable than the United States. You can never say that Chinese people were rich at that time. GDP, national wealth, economic structure and purchasing power parity are totally different concepts, and the corresponding relationship is not strong.

If China wants to change the passive situation in which the purchasing power parity GDP has risen sharply, as long as the appreciation of the RMB will depreciate internally, for example, if a hamburger rises to 20 yuan, then the real exchange rate of the hamburger RMB against the US dollar will drop to 8:1, but this will only increase the pain of the masses.

The purchasing power parity is converted to GDP, which merely gives us a more economic perspective. According to the expenditure calculation, it is a great progress and a part of the world cooperation. But the result of catching up with the Premier League is not too serious. It's silly to be too serious and forget to reform when immersed in happiness.