World Bank Cuts China's Economy Down to Size

World Bank says the world's second-largest economy is poorer than thought
By Jim O'Neill,  Newser Staff
Posted Dec 18, 2007 7:44 AM CST
World Bank Cuts China's Economy Down to Size
Workers walk in to the construction site the Chinese Pavilion after the ground breaking ceremony of the Chinese Pavilion for World Expo 2010 Shanghai on Tuesday Dec. 18, 2007 in Pudong, a new development area of Shanghai, China. (AP Photo/Eugene Hoshiko)   (Associated Press)

China's economy, predicted to become the world’s largest by 2012, actually is 40% smaller than previously estimated, the World Bank concludes, after updating the way it calculates GDP. Although China’s $5.33-trillion economy is still the second largest in the world behind the $12-trillion US, the new appraisal suggests it won't be taking top honors that soon, and it's less powerful, and poorer, than thought, the BBC reports.

The change resulted from the bank's updating prices used in calculating  what's called "purchasing power parity," which corrects for lower prices and wages in China. The report will impact how investment and aid packages are constructed for China. The bank said the US, China, Japan, Germany, and India account for nearly half of the world's GDP. (More China stories.)

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