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December 2, 2008 11:12:19 AM CST

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World Bank Cuts China's Economy Down to Size

Posted Dec 18, 07 7:44 AM CST in Business,  World 

(Newser) – China's economy, predicted to become the world’s largest by 2012, actually is 40% smaller than previously estimated, the World Bank concludes, after updating the way it calculates GDP. Although China’s $5.33-trillion economy is still the second largest in the world behind the $12-trillion US, the new appraisal suggests it won't be taking top honors that soon, and it's less powerful, and poorer, than thought, the BBC reports.

The change resulted from the bank's updating prices used in calculating  what's called "purchasing power parity," which corrects for lower prices and wages in China. The report will impact how investment and aid packages are constructed for China. The bank said the US, China, Japan, Germany, and India account for nearly half of the world's GDP.

Source BBC

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A worker shovels corn at a food processing factory in Shenyang, northeastern China's Liaoning province, Tuesday Dec. 18, 2007. (AP Photo)   (Associated Press)
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People walk on a street lined with shopping stores, Thursday Oct. 25, 2007, in Shanghai, China. (AP Photo/Eugene Hoshiko)   (Associated Press)
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A worker takes photos on a construction site in Beijing Saturday Nov. 17, 2007. China's investments in factories, real estate and other urban assets rose by 26.9 percent in the first 10 months of this...   (Associated Press)
A Chinese man walks past a construction site for modern skyscrapers in Beijing, China, Tuesday, Dec. 18, 2007. Chinese leaders want rapid economic growth to reduce poverty but worry that runaway spending...   (Associated Press)
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