China has officially surpassed the United States as the largest economy in the world, based upon economic output as measured by the International Monetary Fund. China's production of real goods and services will touch about $17.6 trillion this year, while the US will produce $17.4 trillion.
This gap will continue to grow, according to the IMF. By 2019, China is projected to produce about $26.8 trillion, while the US will produce about $22.1 trillion. That translates to a growth rate of more than 52% in the next five years for China, while the rate of US economic growth will be nearly half of that – just 27%.
An article on MarketWatch explores this news in more detail, and touches on the profound implications of this trend. :
Yes, all statistics are open to various quibbles. It is perfectly possible China's latest numbers overstate output — or understate them. That may also be true of U.S. GDP figures. But the IMF data are the best we have.
Make no mistake: This is a geopolitical earthquake with a high reading on the Richter scale. Throughout history, political and military power have always depended on economic power.Britain was the workshop of the world before she ruled the waves. And it was Britain's relative economic decline that preceded the collapse of her power. And it was a similar story with previous hegemonic powers such as France and Spain.“
This is, of course, a long-term development. The US will continue to dominate the world for some time, but the winds are changing. Those winds are blowing East, to a land where the government and people still inherently understand the value of real money – physical gold.
The news keeps coming out about Chinese gold consumption. We know that China's official gold imports grew for a third month in a row in October, and nobody knows what the true unofficial numbers are. Some analysts estimate that China's 2014 gold consumption will be very close to its record high consumption of gold last year, when it surpassed India to become the largest global gold consumer. The World Gold Council reports that Chinese gold demand will grow another 20% in the next three years.
