China's Changing Relationship with the World Economy

This graph caught our eye.

The figure shows the total GDP of China, Japan, and Germany as a share of the US level, which is set at 100%. On this figure, Germany's GDP as a share of the US level peaked in 1979, and Japan's peaked in 1991.

What's interesting about China's situation is not just that the level has risen so sharply. In addition, the peaks for Germany and Japan happened when their levels of per capita GDP were similar or higher to the US level (given the prevailing exchange rates at the time). China's per capita GDP is much lower, suggesting much more room to grow. Similarly, the urbanization rates for Germany in 1979 and Japan in 1991 were in the 70s, while China's urbanization rate is only 58%--again suggesting considerably more room for China to grow.

Full post of Tim Taylor here.