National GDP in developed countries is largely a function of population. GDP per capita is similar across developed countries, so the largest developed economies are those with the biggest populations.
If China develops, it will be the biggest economy in the world. If India develops too, China will fall to # 2.
China is developing, so it’s very likely that it will overtake the U.S. economy in size because it’s population is 4 times larger. This will happen in the next few decades.
There are a number of problems with this sort of analysis.
- Can Chinese growth numbers be believed?
- How much of Chinese growth is wasteful?
- Will China hit the same roadblock in middle-income that other countries have faced.
- Is China’s growth just from more efficient use of capital, so that growth can’t be sustained once it is all used efficiently?
- How sensitive are these predictions to the way in which we adjust for international price differences?
Lastly, a lot of people worry about economic size because of military concerns: bigger economies win wars, and a bigger China might beat America in a war. Here, it’s instructive to study the economics of World War I. In that case, Germany (and its allies) came close to defeating the smaller economies of the U.K., France, Russia, Italy. But, part of the problem with Germany was that it wasn’t as developed top-to-bottom as the British economy was. And, the large subsistence portions of the German economy, which added up to quite a it in the GDP calculations, were not as readily mobilized for war.