The big headlines in international news came following the release April 30 of an International Comparison Program report that suggests China’s economy will overtake the U.S. and India will rise to number three over Japan.
Of course, as with any report of this magnitude, you have to take the whole situation into perspective. The report relies heavily on a variable called purchasing power parity (PPP) that shows the power of the Renminbi in China becoming more powerful than the U.S. Dollar in the U.S.
Simply put, getting a hair cut in Beijing is far cheaper than the same quality hair cut in New York City. That’s a simple way of looking at it. The Financial Times did a great video explaining the report.