Home Business How does China’s economy compared to the United States?

How does China’s economy compared to the United States?

How does China’s economy compared to the United States?

GDP of China Compared to the U.S.
The difference in Chinese and U.S. economies
In terms of purchasing power parity and nominal methods, the United States and China are the two largest economies in the world. The United States is number one in nominal, and China has been number one in purchasing power since 2017 after surpassing the United States. In 2021, the respective attributes of the GDP of the two countries represented respectively “41.89% and 34.75%” of global GDP. According to the International Monetary Fund’s forecast for 2021, the United States leads by $ 6.033 billion, or 1.36 times, based on exchange rates. Calculated at purchasing power parity of CHINA, it is the U.S. $ 3.982 billion, or 1.18 times that of the United States. China’s GDP was approximately in 1960 was 11% of the United States, but in 2019 it was 67% (World Bank 2020).
Since China has a large population, more than four times that of the United States, the gap in per capita income between the two countries is enormous. In nominal and purchasing power parity terms, the “per capita income of the United States is 5.78 and 3.61 times that of China,” respectively. From 1961 to 2019, China experienced 22 years of growth of more than 10%. According to the world profile, China leads the United States in food production and industry. The U.S. agricultural output is only 17.58% of China’s and 77.58% of the industrial sector. The service industry in the United States is more than twice that of China.
COVID-19 crisis and GDP
The Covid-19 first appeared in Wuhan, China, at the end of 2019. In order to control the virus, authorities folded nearly half of the Chinese economy in February 2020, and the urban unemployment rate reached a record height of “6.2% in that month and GDP contracted 6.8% in the first quarter.” A few weeks later, the epidemic stagnated, and the economy resumed growth in the 2nd quarter. At the same time, the coronavirus has spread extensively overseas and converted to a global pandemic, hitting the United States hardest. The United States has the highest number of deaths and cases by Covid-19 all over the world. The unemployment rate in the United States climbed above “14% in April and remained above 10% for the next three months. The latest GDP report shows that the GDP of the United States fell by 2.3% in 2020, while the GDP of China grew by 2.3% during the coronavirus pandemic.” Economists said the disagreement means China could overtake the United States several years earlier than expected and become the world’s largest economy. However, they pointed out that the economic structure of the two countries is different and that China’s per capita GDP is still much lower than that of the United States. Analysts say that China will overtake the United States a few years earlier than expected to become the world’s largest economy. To the coronavirus pandemic.
China’s outlook for the future
Solow’s growth model uses labor (or its enhanced form of human capital) to contribute to the entire production process. Human capital investment has been shown to interpret approximately two-thirds of the change in per capita income between countries (Savvides and Stengos, 2020). China is very suitable for this model. At the beginning of reform and opening up in 1978, its human capital stock was already high, helping China to take off and becoming the driving force of China’s rapid growth. Over the past decade, China has redoubled its efforts on a growth strategy driven by public investment. This results in a lower return on physical investment, as predicted by Solow’s model. In addition, the growth rate of China’s labor force over the past 2 decades has been much higher than that of the total residents. It has since stabilized and is expected to start declining over the next 10 years.
According to Professor Kotkin, the main challenges China faces in sustaining rapid growth during this decade are the outbreak of Cold War 2 under the Trump administration (Hoem, 2020), the US-China conflict (trade war), the Indo-Pacific strategy of the U.S. to the Belt and Road Initiative of China, Taiwan’s independence will also be a significant challenge for China’s rise. The most significant problem is the OBOR strategy in the Indo-Pacific region, which seems like a game-changer in the region and the decline of American hegemony (Mansbach & Ferguson, 2021 ). I also agree, as many countries are linked to this project and will turn out to be the rise of Asia.

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