Monday, April 19, 2010;
The perception of 44 percent of Americans that "China is already the world's top economic power," while modestly inaccurate, alas is not so "completely at odds with the facts," as Arthur Kroeber would have your readers believe ["Five myths about China's economy," Outlook, April 11]. In pure exchange rate terms, China's $5 trillion gross domestic product is about a third of America's $14 trillion economy. But as most economists would admit, China's renminbi currency is grossly undervalued.
The World Bank's index of "purchasing power parity" indicates that a dollar's worth of Chinese currency buys the rough equivalent of $2 worth of goods and services in China.
But the most unsettling aspect of China's economic power is its manufacturing output. According to the latest figures in the CIA's World Factbook, industry accounts for about 22 percent of the U.S. gross domestic product and about 49 percent of China's. In terms of purchasing power parity, China's industrial output is already about $4.3 trillion, compared with $3.1 trillion in the United States. The two countries calculate their industrial product differently, but it's probably accurate to say China's industrial sector is already bigger than America's.
It is no myth that China's trade and financial cheating give Americans plenty to be worried about -- and our elected representatives are understandably angry. But will they do anything about it?
John J. Tkacik Jr., Alexandria
The writer is a retired foreign service officer.