Purchasing Power Parity is guesswork

  Purchasing Power Parity is all guesswork. It is not a real benchmark for analyzing a nation's economy. All it does is compare prices between two nations and assumes what is taking place on the ground. If Nation A imports goods from Nation B, there would be no reason why Nation A would not have the same purchasing power if not even better because Nation A takes advantage of Nation B's low cost goods.

  By importing foreign products, a nation gets the same deal as the nation that product was imported from.

  Nominal GDP analysis is also misleading, because as stated in a previous article, all it measures is inflation. By increasing the volume of legal tender, we also increase the value of the GDP.

 Thus the best way to measure a nation's GDP is to measure that nation's output. Things such as steel production, cement production, automobile production, meats, and grains, and a myriad of consumer output ect.

Table 1: Top 10 steel-producing countries

Rank	Country	2009	2008	%2009/2008
1	China	567.8	500.3	13.5
2	Japan	87.5	118.7	-26.3
3	Russia	59.9	68.5	-12.5
4	US	58.1	91.4	-36.4
5	India	56.6	55.1	2.7
6	South Korea	48.6	53.6	-9.4
7	Germany	32.7	45.8	-28.7
8	Ukraine	29.8	37.3	-20.2
9	Brazil	26.5	33.7	-21.4
10	Turkey	25.3	26.8	-5.6

List of countries by motor vehicle production

1	China	13,790,994	5,708,421	2,069,069
2	Japan	7,934,516	10,799,659	10,140,796
3	United States	5,711,823	11,946,653	12,799,857
4	Germany	5,209,853	5,757,710	5,526,615
5	South Korea	3,512,916	3,699,350	3,114,998
6	Brazil	3,182,617	2,530,840	1,681,517
7	India	2,632,694	1,638,674	801,360
8	Spain	2,170,078	2,752,500	3,032,874
9	France	2,049,762	3,549,008	3,348,361
10	Mexico	1,557,290	1,670,403	1,935,527

 China is the largest economy in the world right now by a very large margin. China's economy is much larger than the united states. The only thing holding China back now is the exchange rate and the lack of total volume of RMB in circulation in China. China does not lag against the united states anywhere. It doubles or triples against the united states in almost everything. Per Capita wise, China still is not first world. But in totality, it is the world's largest economy.