China (Dali Lama) Now 40% Smaller is Still Poisoning Its Own (Dali Lama)

The Chinese Govt (Dali Lama) absolutely detests the mention of the Dalia Lama and of course Jack Burton, being the incontrovertible trickster will now and forever more attach the Chinese Govt. + Dali Lama until hell freezes over or Jack Grokes. All this is a round about way of reiterating the point, which Jack Burton has suspected that China is smaller than greedy stateside salesman have been selling. As a matter of fact it really was not that long ago that Jack Burton wrote a certain U.S. Marine and said "China is in a s@** load of trouble". Jack Burton, however, is so far down the food chain that sunlight has to be pumped down to him to keep his tan up that, of course, no one paid Jack Burton any mind. Excuse me. No never mind. Hey, No problem. Buddy. The bottom of the food chain is not the bottom of the food chain for nothing. Today we reel in the news that Ch(Dali Lama)ina is 40% smaller. Shoot boy. Around these parts that's what we call old news. The hell of it is that we have been reading scholars who, after writing their reports, have a snowball's chance in Hell of ever getting back into China (Dali Lama). After reading a surfeit of what agrees with you you begin to wonder if you really know what's going on or have you had too many extra helpings of what you want to believe. No matter. From across the vast expanse, comes word from from a god: Walter Russell Mead's article in the LA Times

"Revised GDP calculations show that Beijing isn't the giant we thought it was."
Statistics.

When economists calculate a country's gross domestic product, they add up the prices of the goods and services its economy produces and get a total -- in dollars for the United States, euros for such countries as Germany and France and yuan for China. To compare countries' GDP, they typically convert each country's product into dollars.

The simplest way to do this is to use exchange rates. In 2006, the World Bank calculated that China produced 21 trillion yuan worth of goods and services. Using the market exchange rate of 7.8 yuan to the dollar, the bank pegged China's GDP at $2.7 trillion.

That number is too low. For one thing, like many countries, China artificially manipulates the value of its currency. For another, many goods in less developed economies such as China and Mexico are much cheaper than they are in countries such as the United States.

To take these factors into account, economists compare prices from one economy to another and compute an adjusted GDP figure based on "purchasing-power parity." The idea is that a country's GDP adjusted for purchasing-power parity provides a more realistic measure of relative economic strength and of living standards than the unadjusted GDP numbers.

Unfortunately, comparing hundreds and even thousands of prices in almost 150 economies all over the world is a difficult thing to do. Concerned that its purchasing-power-parity numbers were out of whack, the World Bank went back to the drawing board and, with help from such countries as India and China, reviewed the data behind its GDP adjustments.

It learned that there is less difference between China's domestic prices and those in such countries as the United States than previously thought. So the new purchasing-power-parity adjustment is smaller than the old one -- and $4 trillion in Chinese GDP melts into air.

The political consequences will be felt far and wide. To begin with, the U.S. will remain the world's largest economy well into the future. Given that fact, fears that China will challenge the U.S. for global political leadership seem overblown. Under the old figures, China was predicted to pass the United States as the world's largest economy in 2012. That isn't going to happen. Walter Russell Mead