The International Monetary Fund recently reported that China's GDP, as measured by purchasing power parity, has surpassed the United States.
But that's not the main issue, says Nobel laureate economist Joseph Stiglitz. "America’s real strength lies in its soft power—the example it provides to others and the influence of its ideas, including ideas about economic and political life," he writes in Vanity Fair.
And there's the problem. "The rise of China shines a harsh spotlight on the American model. That model has not been delivering for large portions of its own population," Stiglitz says.
The typical American family is worse off in real terms than 25 years ago, and the poverty rate has increased, he notes.
"China, too, is marked by high levels of inequality, but its economy has been doing some good for most of its citizens," he writes.
"China moved some 500 million people out of poverty during the same period that saw America’s middle class enter a period of stagnation."
China's success should serve as "a wake-up call to put our own house in order," Stiglitz says.
MarketWatch columnist Brett Arends says China's lead over the United States in GDP is indeed a big deal.
"This is a geopolitical earthquake with a high reading on the Richter scale," he writes. Throughout history, political and military power have always depended on economic power. This will not change anything tomorrow or next week, but it will change almost everything longer term."
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