It is marginal now, but numbers matter. China has replaced United States from the No. 1 economic power. According to the estimate numbers released by the International Monetary Fund, China occupies No. 1 position with $17.6 trillion (16.5% of global economy) compared to $17.4 trillion ( 16.3%) of the U.S.A. This is on the basis of measure of national economic output of goods and services in real terms. This is a clear indication that the economic equations are changing as in 2000, U.S.A was nearly three times bigger than China. India, another fast emerging country is in the 3rd position with $ 7.12 trillion. China and India respectively occupy the No. 1 and 2 slots in terms of population. The population that was once considered as a burden is now proving to the strength of the countries.
This is the first time that another country is replacing the U.S.A. China has recently decided to adopt international standards for calculation of economic output, which in turn brought certain activities that remained unaccounted earlier. This is the second blow China is giving to the U.S.A in recent times. Last year, China replaced the U.S from the first place in terms of Global Trade.
There is solace for the U.S.A. The above measure is based on the Purchasing Power Parity (PPP). Not adjusted for PPP, the US economy is still leading that of China by $ 6.5 trillion. PPP is, but, widely considered as the true yardstick for comparing economies.
Political and military power in the world has a positive correlation to the economic power. At least since the second world war, world has been living under the dominance of the U.S. How far the change in the economic equation will affect the political equation is to be seen. It may not be visible in near term, but definitely in longer term.