China as Number One: The Relative Size of the U.S. and Chinese Economies

Eswar Prasad makes the case in a NYT column that we should be paying attention to selection of Yi Gang to head China's central bank as a result of China's status as the world's second largest economy. Prasad is right about the importance of China's central bank in the world economy, but it is worth noting that by purchasing power parity (PPP) measures China is already by far the world's largest economy.

Purchasing power parity calculations of GDP attempt to measure all the goods and services...