Gross Domestic Product of US rose to 6.3% in nominal terms as compared to China’s 4.6% gain in 2023. The US economy is emerging from the pandemic period in a better place than China’s.
With the challenges currently faced by China , it is less likely that China will be overcoming US again any time soon.Earlier in 2023 , China was expected to experience an astonishing recovery as it reopened its economy fully to commerce after the Covid-19 lockdown.On the other side , US economy seemed to fall into a recession as the Federal Reserve jacked up interest rates to combat an inflation scourge not seen in decades.
US turned the tables upside down for China,
as This week’s GDP data showed that the US economy ended the year with a bang, growing 3.3% in real, inflation-adjusted terms in the fourth quarter after expanding 4.9% in the third.
It is actually an opposite from what Xi Jinping government claimed about it’s economy growing at 5.3% in 2023 as China is fighting with a years-long real estate bust and its worst streak of deflation in some 25 years. Besides, country’s exports — once a critical pillar of growth — declined in 2023, and unemployment among young people has boomed. The local governments are also under the too much debt.
An economical war between US & China,
However , nominal GDP isn’t the only way to measure the size of a country’s economy.As economists also use something called purchasing power parity, which tries to take account of differences in prices between countries for the same good or service. On that basis, as calculated by Bloomberg Economics, China overtook the US around 2016.But on the world stage , nominal GDP seems a better guide.
Peterson Institute for International Economics President Adam Posen told Bloomberg news agency that Chinese President Xi Jinping has greatly compounded the country’s underlying economic weaknesses by his arbitrary and authoritarian exercise of power throughout the economy and society.
Simultaneously , Posen expected that the US could be on the verge of a pickup in productivity growth that will allow the economy to grow even faster without generating inflation.However , the final act in the Fed’s campaign to return US inflation to its 2% target has yet to be written.
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