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Don't Worry America: You Aren't Poorer Than China

On Wednesday, the front page of the Financial Times declared that China stands poised to surpass the United States as the world's largest economy -- and to do so much sooner than anyone expected. Citing new data from a consortium of leading statistical agencies, the paper explains that when the Chinese and American economies are compared on the basis of purchasing power parity -- or how much a yuan or dollar can purchase in their respective countries -- China is on the threshold of overtaking the United States in terms of economic output as soon as this year.

With a graphic set against Shanghai skyline, the ubiquitous metaphor for Chinese growth, the story proclaims that a geopolitical turning point has arrived:

That pronouncement is sure to provoke a litany of hand-wringing in Washington, where analysts worried about China's increasing power have considered the moment when it becomes the world's largest economy as a signal milestone in its potentially inevitable ascension over the United States. But are these purveyors of American doom and gloom right to worry that Beijing's arrival at the top the global economic pile portends American decline?

In short, no. Indeed, the citizens of the United States are far richer than the average Chinese person, and that's unlikely to change anytime soon. U.S. per capita income in 2012 sat at around $52,000; for China, that figure was about $9,000.

If anything, Wednesday's news is but the earlier arrival of a long-expected development. Given its massive population of about 1.35 billion -- roughly four times the size of the United States -- China was widely expected to eventually become the world's largest economy. It was just a question of when. According to World Bank data cited by the Wall Street Journal, the estimated value of the U.S. economy in 2012 was $16 trillion, double the value of China's. If those figures are accurate, it will be years before the Chinese economy overtakes that of the United States.   

Those figures, however, don't account for fluctuations in the exchange rates between the dollar and China's yuan. Wednesday's data, courtesy of the International Comparison Program, a coalition of statistical bureaus housed under the auspices of the World Bank, uses an updated measure of purchasing power parity, a way of comparing economies across borders by taking into account price differences between countries, to conclude that the Chinese economy is in fact much larger than thought. The FT headline is more a question of an update in accounting accuracy than a substantive change in economic reality. Another note of caution: Some analysts question the reliability of Chinese economic data, suggesting that the Chinese economy may be in much worse shape than official numbers would indicate and may have already begun slowing.

For the moment, Chinese policymakers are desperately trying to figure out how to ensure that their country doesn't get stuck in what is known as the "middle income trap," a phrase that refers to the tendency of economies to stagnate once they escape the clutches of poverty. Escaping national poverty is by no means easy, but entering the ranks of the truly affluent can be staggeringly difficult. (The Indian economy, which has the potential to rival the size of China's, is a good example of what the Chinese government fears. After years of breakneck growth, the Indian economy has slowed, and some analysts are predicting the end of the Indian growth miracle.)

Having expanded its economy enormously, Beijing has been throwing its weight around abroad, fueling fears that Beijing will gradually overtake the United States as the world's leading superpower. China, for example, is investing heavily in Africa and has become embroiled in a nasty dispute with its neighbors over a set of disputed islands.

There's no guarantee, though, that China's economy will continue growing -- or even maintain its current strength. While China was able to escape the recent financial crisis relatively unscathed, many analysts believe that a homegrown economic implosion may not be far off. China's investment-fueled growth have sent real estate prices skyrocketing and seen China's banks issue huge amounts of credit. If growth slows, borrowers may default on the loans used to build the highways and gleaming trains that have come to symbolize China's meteoric rise, China could potentially see a cascading series of bank failures. If enough of them went under, the banking failures could spur widespread social and political unrest.

These are but some of the things to keep in mind when commentators inevitably bemoan the end of American power and the arrival of China.

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How Iraq Turned into the World’s Car Bomb Capital

As Iraqis went to the polls Wednesday for the first parliamentary election since the U.S. military withdrew from the country in 2011, something was missing from the streets of Baghdad -- cars. In a sign of Iraq's struggles to tackle rising violence and terrorist attacks, authorities banned all private vehicles from the streets of the capital and other Iraqi cities in an effort to prevent the type of catastrophic car bombings that have killed tens of thousands of Iraqis in recent years.

Though that ban appears to have been successful in preventing car bombs, the elections were still marred by violence. As the polls closed, Agence France-Press (AFP) had recorded at least 53 attacks throughout the country -- including mortar attacks, roadside bombs, and suicide bombers -- leaving at least 14 people dead and 36 wounded. It was just the latest sign of how violence is surging to levels not seen since the height of the country's civil war.

The statistics show just how precipitously violence has risen in the years following the American withdrawal. During this year alone, AFP's Baghdad bureau has recorded more than 3,000 violent deaths, putting the country on pace for more than 12,000 casualties by the end of 2014. By comparison, AFP recorded less than 7,000 violent deaths in all of 2013. In 2012, the Brookings Institute tallied roughly 5,200 casualties among civilians and security forces, and 4,800 such casualties in 2011.   

While some of this year's deaths among civilians and security force personnel have come in clashes with armed militants in areas like Anbar province, where the government has lost partial control to tribal groups and al Qaeda affiliated militias, the insurgents' preferred weapon in areas they can't hold is the car bomb. And it's not hard to see why: They have been called "the poor man's air force" -- cheap to manufacture, extremely mobile, easily concealed, and capable of wreaking extraordinary devastation without requiring militants to lose their own lives in suicide bombings. And they have been used to devastating effect in the run-up to the Iraqi election, as insurgents launched at least five such attacks in the past week alone -- primarily targeting Shiite neighborhoods and political rallies -- leaving at least 69 people dead and many more wounded.

"You don't need to be a rocket scientist [to manufacture a car bomb] -- a junior high school graduate can probably do it," said Richard Higgins, a former project manager at the Irregular Warfare Support program within the Department of Defense, where he worked with the Special Operations community to mitigate the threat of improvised explosive devices during the U.S. occupation of Iraq. "And you see [al Qaeda] putting out websites that describes this stuff -- you see them imparting this knowledge to recruits as a means to attract people, because it is so empowering. ‘I'm an engineer, I'm a bombmaker' - that's terrorist credibility."

The Iraqi government is not alone in struggling to contain this threat. Improvised explosive devices (IEDs) -- a category of weapon that includes both roadside bombs and car bombs -- were the number one killer of American troops in Iraq, causing nearly two-thirds of U.S. combat deaths through the height of the war. And while Higgins said that the U.S. military developed tactics to go after the networks responsible for manufacturing these weapons, it found itself largely helpless to detect car bombs once a vehicle was actually roaming the streets.

"In terms of a means to stop it...despite an investment of tens of billions of dollars into the IED problem, we haven't really dealt with it," he said.

The Iraqi government has not fared any better. In fact, as of a few months ago Iraqi security forces were still using fake bomb detectors sold to the government by a con man recently sentenced to 10 years in prison by a British court for his role in the fraud. The design for these detectors was based on a novelty golf ball finder, and have precisely no ability to detect explosives.

One might think that such grievous security failures would harm Prime Minister Nuri al-Maliki in today's election, but it's not clear that's the case. The rising tide of violence has allowed the premier to position himself as a defender of order and the rule of law: In January, when Iraqi forces lost control of much of Anbar province, pollsters for candidates hostile to Maliki actually recorded a spike in the prime minister's approval rating.

That's led Maliki, a savvy politician, to make the country's rising violence into a central part of his campaign pitch. "Voters have no excuse before God and history if they do not make the right choice," he said recently. "Iraqis know who is supporting the rebuilding of the country and democracy, and who is supporting terrorism and seeking to destroy the country."

If polls are to be believed, the man who has run Iraq during the bloodiest period in its history is likely to once again win more seats in parliament than any of his rivals.

AHMAD AL-RUBAYE/AFP/Getty Images