DESPITE a growing understanding that China is undergoing world changing economic growth, a practical grasp of the speed and scale of what is taking place still often remains behind the curve. A jolt to help catch up therefore came with the prediction of the latest edition of the IMF's World Economic Outlook that China will overtake the US to become the world's largest economy in real terms in 2016 - in only five years.

But underestimation of the scale of shifts was still possible because the IMF made this projection in what economists term Parity Purchasing Powers (PPPs) - that is, taking into account different price levels in different countries. It is therefore worth spelling out the present growth of China's economy, and the closing of the gap with the US, in dollars.

First, the annual growth of China's market in absolute dollar terms, not simply percentages, is already greater than the US. In 2010 the US economy grew by US$540 billion. China's increase was US$890 billion - over 60 percent higher.

Annual dollar expansion of China's market overtook the US in 2007 and will continue to exceed the US for the foreseeable future.

Particularly striking is that in dollar terms the growth of China's market is accelerating while the US is slowing - as shown in Figure 1. China's acceleration is because not only its economy is growing more rapidly than the US but the RMB's exchange rate is rising.

To see the impact of this, take central economic projections for this year. If China's GDP grows by nine percent, and the yuan exchange rate rises by five percent, then even leaving aside inflation China's market in dollar terms will expand by 14 percent. Add in likely 5-6 percent inflation and China's market in dollar terms will expand by around 20 percent - about US$1,200 billion. Likely expansion of the market in the US will be around three percent GDP growth plus two and a half percent inflation - around US$800 billion.

Taking into account these factors China will overtake the US to become the world's largest economy, even at market exchange rates, by 2019 - in eight years. This recent conclusion of The Economist is in line with earlier research at Antai College of Economics and Management, in Shanghai's Jiao Tong University.

What is the strategic role of foreign companies in what, within a decade, will be the world's largest market? The answer lies in the fact that while China's economy will catch up in size more rapidly than many have understood, to catch up in productivity will take decades.

Take China's strongest sector to illustrate this. According to IHS Global Insight's research, in 2010 China's total manufacturing output was US$2 trillion - marginally overtaking the US's US$1.95 trillion. But China employed over 100 million manufacturing workers to achieve this, compared to the US's 11.5 million. China's manufacturing productivity per worker is one ninth that of the US. The gap in other sectors, for example non-financial services, is bigger.

This creates a 'win-win' situation for China's and foreign companies that will exist for decades. China now has world beating companies such as Huawei in telecoms, or Haier in domestic goods. But the majority of China's companies will not reach the level of productivity of foreign firms for decades, creating huge openings for co-operation as well as competition.

It is this combination of China soon becoming the world's largest economy, but one in which foreign companies in some sectors can possess comparative advantage for decades, that makes China the world's most important market.

The IMF's bare statistics highlight the developing situation in China's market.