1. This is a good piece, and it's a fair bet that China will, eventually, be the world's biggest economy at market exchange rates. But I'd raise two quibbles. First, as others have noted, it seems more likely that the yuan will weaken if/when China lowers capital controls....
2. The magnitude of the resulting net capital outflows and where the exchange rate then settles are anyone's guess. The IMF took a stab in 2013; it estimated that net outflows could be as much as 18% of Chinese GDP.
imf.org/en/Publication…
imf.org/en/Publication…
3. Since then China’s financial markets are much bigger and its asymmetric opening of the capital account means that foreign institutions are already gaining exposure to its assets. So a re-run of the IMF exercise would probably produce higher estimates for capital outflows.
4. The ensuing downward pressure on the yuan would lead to a lower equilibrium GDP for China at market exchange rates. This doesn't mean that China won't catch up to the US, but it could take longer than expected.
5. A second quibble is Noah's point that a straight GDP comparison overstates the difference in living standards between China and the US. In fact it understates the difference.
6. The better way to compare living standards is GDP at purchasing-power parity, but also in per capita terms. Looked at like that, China is still well behind the US: just slightly more than one-quarter its income level. 
7. Hence a major US-China tension. The US looks at China in aggregate and concludes, rightly, that it's damn big and must play by same rules. China, understandably, focuses on per capita income, and so argues that it's still a developing country and should be cut some slack. ENDS
