Some time back, economist Kaushik Basu had made a rough estimate that China would reach the per capita income levels of an industrialized nation of $20,000 by 2016, while India would not get there before 2028. Obviously, the underlying factor was that China’s GDP was double that of India’s in purchasing power parity (PPP) terms.
Now, based on an ADB report and ongoing work by the World Bank, Albert Keidel, an economist with The Carnegie Endowment for International Peace, a US-based think tank, has assessed that China’s economy could be 40% smaller than its current estimates. According to Keidel, its size could actually be that much smaller because of the lack of careful price surveys on China and the fact that the World Bank’s PPP estimates dated to the late 1980s.
The growing tribe of observers keen on comparing India and China would do well to wait for the World Bank to announce its PPP data revisions later this year.