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Like you, I am no fan of GDP via PPP numbers, particularly when you are discussing wildly different countries. Splitting the difference at 2 trillion dollars of GDP is fine by me -- I suspect that even the customs numbers I cited have some big problems in them.

But I don't discount things like the massive growth in raw material imports that China is seeing -- numbers in excess of 30% in one year are just incredible. China is now the world leader in raw steel -- in fact, they produce more than the E.U. does, and more than all of North America (well, that's mostly us since Canada isn't all that large of a producer of raw steel.)

If this were some vigorous young democracy, that would be one thing. But this is a totalitarian regime, and that's just not good in my estimation.

(If one did use such a measure of comparing exports/GDP, then let's see, our exports for both goods and services are a bit over 1 trillion dollars, and our imports are a bit over 1.5 trillion. So that's something over 2.5 trillion dollars compared to China's 1 trillion dollars, or 40% of our number. Taking an 11 trillion dollar GDP for the U.S., assuming that we could just apply that 40% to match GDPs would give China a 4.4 trillion economy. (If only the world were that easy! ;-) )

But you are excluding investments from your US total, as well as all input and outputs. I think that the Chinese numbers are really not right. Again, I think it is at most two trillion, and I include in that "hidden" and "black" economies that must surely exist over there. If we used the same metric in the USA we would be talking about an economy roughly the size of California.

Again, I am not try to downplay the threat of China. Rather, I am just call for a little sanity about the whole thing. One hears all of these figures bandied about yet when one takes a hard look at the data the picture is not so dark.

Of course China must unpeg, open its markets, implement rule of law and all the rest. My point is that those sort of issues are not niceties but rather structural necessities required further growth. Once they are implemented then many of the "advantages" of China evaporate.

I quite understand that if these reform do not happen then we are dealing with the classic problems of fascism, only here cast (for the time being) in economic terms. That is, however, a wholly different problem than the one I am addressing here.

This is the real riddle of China: Economically it is a bubble, but geopolitical it is an expansionist socialist/fascist power with that generates effects causes and conditions that transcend the narrow economic restrictions and categories that we have tended to use in these matter as we consider the developing world in relation to global economies. With the largest population on earth, the larger problems of China can not merely be left to market forces. There are deep repercussions.