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BP just released its latest "Statistical Review of World Energy 2017."
On page 8 of the BP report, China is shown to have consumed 34% more total energy than the United States for the year 2016.
China is the world's largest energy consumer at 3,053 MTOE (Million Tonnes Oil Equivalent).
The United States is in second place with consumption at 2,273 MTOE.
IF the technological level is nearly equivalent then ENERGY CONSUMPTION should be the metric to determine who has the larger economy.
Interestingly, the US currently has a higher nominal GDP than China (but not in PPP). How do we explain this apparent contradiction? China buys more cars and computers than the US every year. There does not appear to be any technological gap between the average Chinese and US citizen.
There is a flaw in nominal GDP. Nominal GDP is based on the JUDGMENT of traders. Since China's currency is not fully convertible, there is less demand for China's Yuan. For example, you cannot buy land in China. It is owned by the government. Also, the US has a very strict legal system in place. If you have money in the US, you have confidence that hiring the best lawyers in the country will help you to avoid jail for crimes like embezzlement, insider trading, and other white-collar crimes. In China, wealth offers no protection against government prosecution.
Rich people prefer the United States over China. The US offers generous legal tax loopholes and offshore tax havens. There are also periodic amnesty programs proffered by the US government to tax cheats. In contrast, tax cheaters in China go straight to jail.
In conclusion, higher demand for US currency over the Chinese Yuan causes a distortion that leads to a higher nominal currency value for the US Dollar compared to the Chinese Yuan. However, in terms of real-world economics, I think China's economy is clearly larger than the US.
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BP Statistical Review of World Energy June 2017
On page 8 of the BP report, China is shown to have consumed 34% more total energy than the United States for the year 2016.
China is the world's largest energy consumer at 3,053 MTOE (Million Tonnes Oil Equivalent).
The United States is in second place with consumption at 2,273 MTOE.
IF the technological level is nearly equivalent then ENERGY CONSUMPTION should be the metric to determine who has the larger economy.
Interestingly, the US currently has a higher nominal GDP than China (but not in PPP). How do we explain this apparent contradiction? China buys more cars and computers than the US every year. There does not appear to be any technological gap between the average Chinese and US citizen.
There is a flaw in nominal GDP. Nominal GDP is based on the JUDGMENT of traders. Since China's currency is not fully convertible, there is less demand for China's Yuan. For example, you cannot buy land in China. It is owned by the government. Also, the US has a very strict legal system in place. If you have money in the US, you have confidence that hiring the best lawyers in the country will help you to avoid jail for crimes like embezzlement, insider trading, and other white-collar crimes. In China, wealth offers no protection against government prosecution.
Rich people prefer the United States over China. The US offers generous legal tax loopholes and offshore tax havens. There are also periodic amnesty programs proffered by the US government to tax cheats. In contrast, tax cheaters in China go straight to jail.
In conclusion, higher demand for US currency over the Chinese Yuan causes a distortion that leads to a higher nominal currency value for the US Dollar compared to the Chinese Yuan. However, in terms of real-world economics, I think China's economy is clearly larger than the US.
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BP Statistical Review of World Energy June 2017
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