It’s about time for the G-9
The members of the Group of Seven (G-7) are Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. They have met since 1975 at annual boondoggles to discuss political and economic issues. According to the State Department, the Group of Eight (G-8) are the G-7 nations plus Russia. Russia began to participate in a portion of the meetings at the 1994 G-7 Summit in Naples. Russia officially became the eighth member at the 1997 Denver, Colorado, “Summit of the Eight.” While Russia is a G-8 member, it does not participate in financial and economic discussions, which continue to be conducted by the G-7.
Now, with China poised to overtake Germany in GDP this year, it would appear to be about time for that nation to be included in a new G-9. WSJ:
Chinese statistics due this week are likely to show that the country is on track to leapfrog Germany as the third-biggest national economy this year…Overtaking Germany in absolute terms may not be seen as an important triumph to China’s leaders…And it might not be surprising that a country with 1.3 billion people produces more in a year than Germany’s 82 million inhabitants. But passing that milestone could add to increasing anxieties in wealthy nations about China’s rise.
Recent estimates put the size of China’s gross domestic product last year at $2.8 trillion, breathing down the neck of Germany’s $2.9 trillion national output for the period. Only the U.S. ($13.2 trillion) and Japan ($4.4 trillion) have bigger economies, according to International Monetary Fund data. GDP measures the total value of goods and services produced in a nation.
Chinese government data for the second quarter, due out on Thursday, are expected to show that Chinese output grew by around 11% in this year’s first half, a rate that economists think China will maintain this year. Even optimistic predictions for German growth, at close to 3%, are no match for that…
By another measure, known as purchasing-power parity (PPP), China is already the world’s second-biggest economy. If exchange rates are adjusted to equalize the cost of goods in different countries, then the value of China’s total output was $10 trillion last year, according to estimates by the IMF. That eclipses Japan’s $4.2 trillion and Germany’s $2.6 trillion, and is hot on the heels of the U.S.’s $13 trillion economy on this measure. Purchasing-power parity tends to make developing economies appear bigger than comparisons using current exchange rates, because a dollar can often buy more goods in poor countries than in rich ones.
Though we have noted on many occasions the controversies regarding China’s GDP accounting as well as the manifold problems of PPP accounting, China’s $2.8 trillion (give or take) economy is more than twice the size of G-8 member Canada’s GDP. Based upon the size and growth of China’s ecomony, and the importance of its exports to the developed world, it is high time that the G-8 became the G-9.
July 18th, 2007 at 9:57 am
I don’t know if I agree that China is ready yet. Rather than looking just at the size of the country’s GDP, try looking at it per-capita (via the CIA World Factbook).
US $44,000
Japan $33,100
Germany $31,900
Italy $30,200
UK $31,800
France $31,100
Canada $35,600
Russia $12,200
China $7,700
I don’t think Russia belongs, either. Russia was included for political reasons, and in hopes of flattering Putin to make him continue democratic reforms. (Worked real good, din’t it?)
On a per-capita basis, China is still well down in Third World basis. Perhaps a case can be made for including China for political reasons, but they don’t rate yet economically.
July 26th, 2007 at 12:44 pm
Our GDP is as large as the next four largest GDP’s combined — and yet millions of Americans believe we are living in a stagnant, poverty-riddled society. Amazing how easily human beings can be convinced to believe what is patently false. Pathetic, really.