Most Americans think China is No. 1 economy; it isn't

More than half of Americans mistakenly see China rather than the U.S. as the world's leading economic power, according to a Gallup Poll out today.

In Gallup's phone poll, conducted in early February, 52% of Americans said China is the leading economy, compared with 32% who chose the U.S.

The last time Gallup asked the question, in 2009, China and the U.S. finished in a virtual tie. The latest survey has a margin of error of plus or minus 4 percentage points.

In reality, the U.S. is by far the world's largest economy, with estimated gross domestic product of $14.62 trillion in 2010, according to the International Monetary Fund.

China became the second-largest economy last year, overtaking Japan, which had held that position since 1968. China's 2010 GDP came in at $5.88 trillion compared to Japan's $5.47 trillion.

By some economic measures, the gaps between the world's leaders are even wider: China's per-capita GDP is about $4,000, compared with Japan's $42,000 and the USA's $47,000.

"It's still an emerging economy, and the living standard (of the Chinese) is much less than people in developed economies," says Jian Chang, China economist for Barclays Capital in Hong Kong.

Yet the sharp jump in respondents who picked China as the world's top economic power this year signals Americans' growing knowledge about the country and its economy, according to Jeffrey Jones, managing editor of the Gallup Poll. Also, "Everyone is aware of the struggles of the U.S. economy."

The findings come on the heels of a Pew Research Center survey in January, also showing that more Americans view China instead of the U.S. as the global economic leader.

Additionally, Pew found that Americans believe Asia has become more important to the U.S. than Europe is.

Meanwhile, in the latest Gallup Poll, 70% of Americans said that developments in China have become "vitally important" to the U.S.

China's rapid economic ascension, along with the growing purchasing power of its middle class, are fueling Americans' perception that China is unstoppable, says Cheng Li, senior fellow at the Brookings Institution, a Washington, D.C., think tank.

But China faces significant challenges. One is a property bubble that a growing number of analysts believe, if it bursts, could shake that country's economy and ripple around the world.

The Gallup findings suggest that while Americans may be ignoring China's economic shortfalls, they are "looking at the bigger picture, which is, China is on the verge of significant power," Li says.

In Gallup's 2011 poll, nearly half of the respondents said they expect China to be the world's leading economic power in 20 years. About a third chose the U.S.

That is a reversal from 2009, when 45% opted for the U.S. and 34% for China.

Goldman Sachs predicts that China will overtake the U.S. as the world's largest economy by 2027.