Japan or China as Number 2? It Isn't Close

Yet again the NYT tells us that China just passed Japan as the world's second largest economy. This is misleading because this is using an exchange rate measure of GDP. Most economists would use a purchasing power parity measure which values all goods and services at a common set of prices.

Using this measure, China's economy passed the size of Japan's in 2001. Its economy is now almost three times as large as Japan's.