China overtakes Japan ?

I saw the following news flash on several news channels and almost every news paper I picked up today.

China overtakes Japan as No.2 economy

Well, if you wish to see how these countries did relatively, here is another one:

Let us skip our discussion on the figures above.
Moreover, the stats above say more than anything I can describe in the scope of a blog.

However, if you were an alien who just landed on earth and came across this article in the news paper that you received as the first thing upon landing. And incidentally you had a geographical map of the planet earth in the other hand.

You'd better be surprised!

How could this possibly be a news?
Wondering ?

The gross domestic output of a country with 6.5% of world's land area and 19.5% of the world's population has just crossed that of a country with 0.25% of world's land area and 1.86% of the world's population!

GDP: The gross domestic product (GDP) or gross domestic income (GDI) is a measure of a country's overall official economic output. It is the market value of all final goods and services officially made within the borders of a country in a year

Further, with such difference in the land areas and populations of different countries, GDP alone surely isn't a true reflection.
So let us look at Per Capita Income.

Per capita income means how much each individual receives, in monetary terms. It is the measure of the amount of money that each person earns in the country, of the yearly income generated in the country. This is what each citizen is to receive if the yearly national income is divided equally among everyone.

China's per capita income of $3800 per person is only a fraction of Japan's $40000 per person and America's $47000 per person. In case you are curious to know, India's per capita income is now in 4 figures (that's over $1000 per person)

But then, you can afford a lot more with $10 in India or China than you potentially could in the US. (i.e.: with $10 in your hands, you can eat more burgers or get more haircuts done in India than in US)

$10 in US not equal to $10 in India not equal to $10 in China (!!!)

To accommodate for this difference in the cost of goods and services, and in the absence of "one world" and "one currency", comes the concept of "Purchasing Power Parity"

Well, come to think of it, and it is this parity that has helped build a lot of export oriented/outsourcing based businesses across borders. (Other than those arising either from the abundance/uneven distribution of resources by geographies or from specialization in creation of products/technologies/services)

Coming back to GDP, Per Capita Income and Purchase Price Parity:

"With 90% of India's wealth and income in the hands of 10% of the people and the remaining 10% of wealth and income distributed amongst the remaining 90% of the population, all above parameters and figures are far from a true reflection and we continue to be the most unbalanced"

In short, these macroeconomic terms may still show economic progress with "the rich getting richer and the poor getting poorer"

Perhaps, we need not the mean or median but the standard deviation to measure ourselves.