‘Bitcoin vs Dollar’: China Overtakes the U.S. as World’s Largest Economy

| Updated
by Zhanna Lyasota · 4 min read
‘Bitcoin vs Dollar’: China Overtakes the U.S. as World’s Largest Economy
Photo: Zach Copley/Flickr

The IMF has reported that China will produce $17.6 trillion this year, ahead of the $17.4 trillion made by the USA, which makes China’s economy be the world’s largest. The question is: “How will that affect Bitcoin?”

The International Monetary Fund has recently released a report comparing an adjusted GDP of various countries. The IMF has reported that China will produce $17.6 trillion this year, ahead of the $17.4 trillion made by the USA. In 2000 the US produced nearly three times as much as China.

Now China accounts for 16.5% of the global economy when measured in real purchasing-power terms, compared with 16.3% for the USA.

The latest economic earthquake follows the development last year when China exceeded the USA for the first time in terms of global trade. China’s recent decision to bring gross domestic product calculations in line with international standards has exposed activity that had previously gone uncounted.

These calculations are based on PPP (purchasing-power parity), a well-established and widely used economic method which measures the actual output as opposed to fluctuations in exchange rates. PPP is a good way of comparing economies. By the way, it was used by McKinsey & Co. consultants back in the 1990s when they undertook a study of economic productivity on behalf of the British government.

When one looks at international exchange rates, the US economy remains bigger than that of China, supposedly by almost 70%. However, it turned out that such measures, although they are widely followed, are largely meaningless.

We have lived in a world dominated by the USA since at least 1945 and, in many ways, since the late 19th century. We have lived for 200 years, since the Battle of Waterloo in 1815, in a world dominated by two moderately democratic, constitutional countries in Great Britain and the USA. For all their weaknesses, the two countries have been leaders worldwide in terms of civil liberties, democratic processes and constitutional rights.

However, according to the report of the Financial Times, China’s economy may now be the world’s largest, but it’s still not the richest. GDP per head is still less than a quarter of the US levels.

How Will the Case Affect Bitcoin?

Being home to the world’s largest-volume bitcoin exchange BTC China, China could be leading the global rise of bitcoin and the largest company for mining operations.

Looking back, in May 2013 China surpassed all other countries with 84,000 bitcoin wallet downloads.

Then there appeared half hour CCTV2 (Chinese state-owned television) documentary on digital currencies, which sparked local interest, and provoked a mining boom.

However, capital regulations in China are strict. It is easy to bring money into the country, but getting it out to invest or spend is much more difficult. That means that there are plenty of wealthy Chinese citizens and residents looking to move their money around the world with greater freedom.

“Some people have the equivalent of tens of millions in dollar-equivalent value in China and they want to get it out. They want to send their children to school in Canada, the US, Australia. Wealthy families, new and old money — it’s not a lack of trust in the local system, it’s just a need to diversify their investments.” explained Zennon Kapron, a Shanghai-based Canadian bitcoin enthusiast who performs research and consulting to the financial technology world through his company Kapronasia.

According to Kapron, China’s huge population is cash-heavy but increasingly wired; and domestic investment options are limited to stocks, property, and more property.

Furthermore, in September it has been revealed that the majority of bitcoin transactions came from yuan trades. BTC China tweeted that a total of 71% of bitcoin trades could be attributed to yuan users, in other words, the Chinese market. Second place goes to the US dollar and euro transactions fall behind at a distant third.

“There are two things affecting bitcoin in China. One is that there are a lot of [bitcoin] miners in China,” Linke Yang, co-founder and vice president of BTC China, told CNBC. “The second is that, traditionally, high net-worth individuals and investors first go to the property market to invest and then the stock market, but since the property market is capped and controlled and stocks maybe aren’t doing so well that’s changing. After we had the China Central Television piece [on bitcoin in March] people here know about bitcoin and are putting their money into it.”

According to the CoinMarketCap, the market cap of Bitcoin is $ 4,984,534,969. The BTCChina’s Volume (24h) is $ 52,489,733. Check the information on Bitcoin markets trading.

Bitcoin News, Cryptocurrency News, News
Zhanna Lyasota

Zhanna has a background working for an American multinational food and beverage company as well as at a number of translation agencies serving similar top multinational corporations. She enjoys discovering new cultures as well as learning new languages. She is also a lover of all things fabric and floral ,especially if they are design-related. Zhanna is a graduate of Belarusian State Economic University with a major in Intercultural Business Communications.

Related Articles