December 5, 2014
China, No. 1? Wake Up, America!

by Kent Hughes

According to the International Monetary Fund, early in December 2014 China’s economy surpassed that of the United States, which had led the world since the late nineteenth century. Meanwhile, the United States experienced large trade deficits and an eroding industrial base. To respond, the United States must promote fair international trade rules and embrace domestic policies for public and private growth. Few Americans greeted the above headline by happily chanting “We’re number 2!” even while economists and journalists quibbled over the meaning of the ranking, which had been announced by the International Monetary Fund (IMF). The IMF’s ranking is based on purchasing power parity—what he Chinese economy is worth in terms of purchases within China—without accounting for either the U.S. economy’s ongoing superiority in terms of value on the world market or the generally higher U.S. standard of living

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