Don’t worry folks, we’re keeping our PG rating here. I’m talking about GDP. I had some people question my line in yesterday’s post that China’s economy is one-third larger than the US economy and growing twice as fast. 

This is true. The data come from the World Bank. According to the data, China’s GDP last year was $41.2 trillion, compared to $30.8 trillion for the United States.

These numbers are GDP measures by purchasing power parity. This measure applies a common set of prices to all goods and services, regardless of whether they are produced in the United States or China. This means a car, a washing machine, a hospital visit, and a haircut are assumed to carry the same price, regardless of which country it is produced in. 

There is an effort to adjust for quality differences, but this is undoubtedly imperfect. Nonetheless, it should get us in the ballpark, and for purposes of comparing living standards and economic power in the world, it will generally be far more useful than the more commonly cited currency conversion measures. 

That measure takes domestic GDP measured in China’s currency and then converts it into dollars at the current exchange rate. It is not clear what this measure gets us, especially since it’s not unusual to see a currency rise or fall by 10 percent or more in a year, which would imply an implausible rise or fall in GDP.

As I noted in yesterday’s piece, not only is China’s GDP one-third larger than the US economy, it is growing twice as fast. This means that the addition to GDP each year is far larger in China than in the United States. Here’s what the picture looks like for the first half of 2026.¹

China’s economy grew by just under $1 trillion in the first six months of 2026. The US economy is on track to grow by just over $300 billion. Unless growth in China slows radically, or the growth rate of the US economy accelerates in a way that no one other than Donald Trump is predicting, this gap will continue to grow.