But if we adjust for PPP, we see that the Chinese economy reached almost $27.21 trillion in 2021, compared with $20.5 trillion for the EU and $23 trillion for the United States. In terms of PPP, in fact, China’s economy overtook America’s back as much as six years ago.
And what if we reduce the proportional importance of the service sector relative to industry and commodities? Services account for approximately
, even less than in Russia (
). If we roughly apply Sapir’s ratio of doubling the valuation of the nonservice sector to China, we may have to consider that in a very real and relevant way, the Chinese economy accounts for something like 25%-30% of the global economy on a PPP basis, rather than the current
of 18%-19%. That would put the combined Chinese and Russian economies at about 30%-35% of the global economy (again, adjusting for PPP and the overvaluation of the service sector)—a behemoth and likely unsustainable challenge for a trans-Atlantic community that looks increasingly focused on using maximalist economic sanctions to punish bad actors and achieve desired policy outcomes. That challenge becomes even more daunting when we consider that the service sector accounts for roughly
of the U.S. economy and
of the EU’s—suggesting a potentially significant degree of overvaluation in Western economic heft, and far more parity in relative economic power with China and Russia.
