ABSTRACT
A Chinese economy that is four to five times larger than it was previously believed to be, and continues to grow at a 5 to 6 percent annual rate, will play an equivalently expanded role in the world economy. Although there are some purposes for which foreign exchange rates are appropriate to use in comparing national economies, for the specific purpose of comparing the relative size of different national economies the PPP rate is clearly preferable. If China's economy becomes more open to foreign imports, and if one accepts the previously cited estimates that the size of the Chinese economy is currently about 2 trillion dollars, China will become an increasingly important market for exports from the US as well as from the Asia-Pacific region and the rest of the world. China is still too small to be anything approaching the "locomotive" for the rest of the world's economies that the US economy was in the 1970s and the 1980s.
