A recent World Bank report said that China will replace the U.S. and take the number one spot of being the number one economic power this year.
The World Bank's International Comparison Program suggested that China's economy would outperform the U.S. and become the world's biggest economy. The report used the Yuan's purchasing power and said it is stronger than what was reflected by exchange rates.
The Bank's report puts China's gross domestic product (GDP) at 87 percent, which is the size of the U.S. economy by the end of 2011.
The report also projected that China's purchasing power parity (PPP) will go beyond that of the U.S. late this year.
However, the World Bank's report stated that there are limits to the methodology they used for the study. For instance, it categorically stated that PPPs are statistical estimates and can still be subject to errors.
The report also said that PPP as a metric should be treated carefully and must be seen only as approximates to the true value of what it's trying to measure.
"PPPs should not be used as indicators of the under- or overvaluation of currencies," the World Bank report stated.
Apart from China, the report identified five largest middle income economies, which include India, Russia, Indonesia and Mexico. These economies account for 32.3 percent of the world's GDP.
For bigger and more prosperous countries, which the bank classified as "high income economies," the six largest are the U.S., Japan, Germany, France, the United Kingdom and Italy. These largest high income economies account for 32.9 percent of the global economy.
In another report, the Guardian said that "this could be the century of the Chinese consumer" noting the supercharged purchasing power Chinese consumers have. More Chinese consumers are spending exorbitantly in some of the biggest retail names in the West.
It reported that retail sales have been better that continues to boost Beijing's hopes that its citizens' consumer spending will continue to move upwards.
However, Chinese authorities have not welcomed the World Bank findings positively. In fact, China's Bureau of Statistics is disputing the report and said that the calculation has constraints.
Experts from the country said the report doesn't reflect the reality of the Chinese economy. Professor Ren Ruoen of Beihang University said using PPP as an indicator compares two countries' GDP in expenditure terms with the same or similar consumer spending preference.
Ren pointed out that using PPP could sometimes be difficult to find similar products in different countries.