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     How does one rank countries by economy? GDP (gross domestic product) springs to mind, but GDP doesn't account for the differences in lifestyle between countries. Food, real estate, luxuries, all these cost and weigh differently in different countries, and a direct comparison of GDPs will not produce a sufficient conclusion.
     So how do economists do it? They use a different unit: PPP (purchasing power parity). PPP is a tool specifically designed to measure the relative values of different currencies around the world, and PPP exchange rates can be used to convert GDPs into a common, comparable value.
     According to new PPP data, China, which was predicted in 2005 to overtake the USA in 2019, will now overtake the United States by the end of the year to become the world's largest economy. This 20% jump in predicted PPP reflects China's immense economic growth, which forecasts predict will continue to outpace the USA.

More Here: The Economist