China has taken giant strides over the past 40 years towards economic prosperity and development. Almost four decades ago, China’s GDP was 1/40th that of the USA and 1/10th of Brazil’s own. Today, China is a rising economy as well as a political power. China’s economy has since grown at an impressive rate of more than 8% annually. The per capita income of China today is one-fifth that of the U.S. and almost the same as Brazil’s. Keep in mind that the size of China’s population is almost five times the size of the U.S. population. China’s GDP in 2013 was recorded $9.24 trillion. USA’s GDP for the same year was $16.77 trillion. The Chinese economy is second just to the Americans.
China’s growth rate has an average of 10% in the past 30 years. Its annual exports are over $2.34 trillion. The foreign exchange reserves of China are more than $3.3 trillion. In additional foreign exchange assets, China holds $200-400 billion although they are not categorized as part of the foreign exchange reserves of the country. China is the highest primary energy consumer in the world followed by the U.S. China relies heavily on indigenous coal, which fulfils more than 65% of the energy needs of the country.
China has a population of more than 1.3 billion, the largest in the world. The country is self-sufficient in food and feeds almost 22% of the total world population. It controls approximately 10% of arable land of the world. The biggest impediment to China’s economic growth has always been the gigantic size of its population, which is being controlled by following the policy of one child per family.
China’s journey towards economic development and stability began following the communist revolution, which was led by the founding father of the country Mao Zedong. China today is no more a radical communist country. It is both a socialist tortoise and a capitalist hare at the same time. Despite nationalizing most of its state owned enterprises, China, unlike the U.S., has not produced a hyperactive class of multi-billionaires.
America’s GDP growth rate, on the other hand, has remained below 2% in the past 10 years. Despite a comparatively very low growth rate, USA’s economy is the world’s largest and most technologically advanced. The country is home to some of the biggest corporations in the world like Apple (AAPL, Financial), Microsoft (MSFT, Financial) and Google (GOOG, Financial)(GOOGL, Financial). Technologically, the U.S. economy is the best. U.S. corporations spend billions of dollars on research and development annually. In terms of quality, U.S.-produced goods are far superior to those produced in China. The world has nothing to match the U.S. financial markets. The U.S. is more sophisticated and modern than the financial markets of any other country in the world.
China’s impressive growth rates can be attributed to its increased efficiency and productivity more than capital investment. The political and economic reforms initiated by the Chinese government from time to time have contributed a great deal in transforming a poorly performing Chinese economy into a dynamic and progressive one. The GDP growth in 2015-16 in China and the U.S. is estimated by the International Monetary Fund to be 7% and 3.5% respectively.
As China tries to play catch-up with the U.S. economy, the authorities are putting much emphasis on international trade in an effort to bring as much foreign exchange as possible into the country seeing that the U.S. greenback is doing so well, especially globally. With global competition heating up, especially between China and the U.S., one can only wait and see which economy will come out on top.