Contrary to recent headlines, China isn't on pace to surpass the United States as the world's preeminent economic power this year, says Harvard economist Jeffrey Frankel.

"This [claim] is a startling development, or it would be if the claim were not essentially wrong," he writes in an article for Project Syndicate. "In fact, the United States remains the world's largest national economy by a substantial margin."

The idea of China's quick ascension stems from a report published last month by the World Bank.

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The report calculates countries' GDP using purchasing-power-parity (PPP) exchange rates, which take into account price differences among countries, rather than market exchange rates.

"This is the right thing to do when looking at inflation-adjusted income per capita in order to measure people's living standards," Frankel explains. "But it is the wrong thing to do when looking at national income in order to measure the country's weight in the global economy."

China is far away from besting the United States economically, using either exchange-rate method, he notes. At market exchange rates, the U.S. economy is 83 percent bigger than China's.

China's economy grew 7.4 percent in the first quarter, compared with 0.1 percent growth for the U.S. economy.

As for PPP exchange rates, they're needed to compare different countries' per-capita income, Frankel argues. "Looking at per capita income, even by the PPP measure, China is still a relatively poor country," he adds.

"Its per capita income is now about the same as Albania's — in the middle of the distribution of 199 countries."

But China benefits from having the world's biggest population, Frankel insists. "Multiplying a middling per capita income by more than 1.3 billion 'capita' yields a big number. The combination of a large population and a medium income gives it economic power."

The analysis is similar for the United States, he suggests. "We consider the U.S. the No. 1 incumbent power not just because it is rich." Eight countries top the United States on per capita income, including Monaco and Qatar.

"But we do not consider [them] to be among the world's leading economic powers, because they are so small. What makes the U.S. the world's leading economic power is the combination of its large population and high per capita income," Frankel writes.

Using PPP exchange rates doesn't answer the question of whether China's economy is passing the U.S. economy, he notes.

"The reason is that when we talk about an economy's size or power, we are talking about a broad range of questions," Frankel states.

"From the viewpoint of multinational corporations, how big is the Chinese market? From the viewpoint of global financial markets, will the renminbi challenge the dollar as an international currency?"

GDP at market exchange rates give the best answers, Frankel says. "China can buy more than any other country in the world, except the U.S."

Louis Kuijs, chief China economist for the Royal Bank of Scotland, is skeptical about using PPP exchange rates too, largely because of the volatility of the data that arises when using PPP.

"Having observed these huge changes in estimates, I've become a bit wary of these estimates," he tells The New York Times. "The market can be wrong but at least it's a pretty objective measurement."

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