The simple logic is that prices aren’t the same in each country: A shirt will cost you less in Shanghai than San Francisco, so it’s not entirely reasonable to compare countries without taking this into account. Though a typical person in China earns a lot less than the typical person in the US, simply converting a Chinese salary into dollars underestimates how much purchasing power that individual, and therefore that country, might have. The Economist’s Big Mac Index is a great example of these disparities.So the IMF measures both GDP in market exchange terms, and in terms of purchasing power. On the purchasing power basis, China is overtaking the US right about now and becoming the world’s biggest economy.
Chinese-made cars will be making their way to the U.S. next year, and guess which company is going to start exporting them to our shores?A Chinese company, of course.Chinese-owned Volvo’s parent company, Zhejiang Geely Holding Group, will begin exporting its S60L from China to the United States as early as next year, according to a Reuters report which quoted a senior Volvo executive.Volvo is trying to take advantage of two new Chinese factories that will make up an export hub to send vehicles to the U.S. and Russia.