According to the Center for Economics and Business Research, the Chinese economy is expected to surpass the US in 2028. China’s economy was originally expected to take longer to pass the US. Economists had initially predicted it to happen in 2032. At the moment, the US still maintains its status as the largest economy in the world. According to the Bureau of Economic Analysis, the US GDP is about $21.49 trillion with a 6.3% annual increase. These numbers do not take into account the recent changes in the economy with the COVID-19 pandemic. According to CNBC, latest reports show the US at $20.9 trillion with a 2.3% decrease and China at $14.7 trillion with a 2.3% increase. While this does expedite China overtaking the US, it is not the only reason behind China’s economic success.
Drastic changes in economic policy have allowed China’s economy to flourish. Before the 1970s China wasn’t even considered one of the top 8 economies, but now it is considered second. Starting in 1979, China underwent enormous social and economic transformations leading some to call this “The Chinese Century”. Not surprisingly, much of this growth comes from the manufacturing, services, and agricultural industries after Deng Xiaoping made large market-based reforms. Under the new economic policies, China now has a socialist market economy, where a majority of businesses are public or state-owned. The US has a mixed economy with both private and public businesses. While China still has a lot of private businesses, much of its economy is heavily regulated by the government. According to Asialink Business, Government management has focused primarily on promoting balanced growth, better wealth distribution, and improved environmental protection. This idea is very different compared to the US policy where we see private businesses favored and an increase in economic inequality. In lesser terms, the poor are becoming poorer and the rich are becoming richer.
As a whole, the US seems to be doing well, but this unequal growth will ultimately lead to stagnation. After a certain point, the rich will own such a large portion of the country’s wealth that the poor majority won’t be able to sustain the country anymore. The US however, could have the upper hand in terms of affairs with other countries. While many project the Chinese to overtake the US, some still believe that the US will remain number one. Part of the reason for this is the lack of governmental overreach and less stringent foreign trade laws. While the US has more regulations for work conditions and other labor laws, China enforces many laws to prevent monopolies and to ensure their exports are consistently higher than their imports by keeping work within the country. The US government is careful to let businesses run however their owners see fit and not dictating how or where products are made. We see this often with the large imbalance between the number of goods being exported out of China into the US and the number of goods exported from the US to China. This difference with each country’s foreign trade policies are also reflected in their policies regarding stock markets. While Chinese companies like Alibaba and China Unicomp are allowed on the New York stock exchange, no American companies have been permitted to list on the Chinese stock market.
While the US and its businesses don’t necessarily need more government oversight, I think some newly focused policy change could benefit our economy. We continue to see our economy benefiting big business. Large monopolies make it difficult for smaller businesses to stay in businesses especially in periods of economic downturn like we are seeing right now. Small businesses are the backbone of America and while they do not lead to huge riches, they are how this country was started. Small businesses continue to be essential for small towns where they help employ many with fair wages and compassion. Those at the top of the corporate chain making a lot of money don’t care that they are taking away from small businesses and profiting off of the hard work of their underpaid, lower-level workers. The greed for money is so great that people would rather keep making a lot of money than relinquish a portion of that money so that the lower class can have more and spend more. American culture teaches us to be greedy and to do whatever it takes to be on top. Chinese culture, on the other hand, promotes hard work and success but still allows for everyone to progress as a country and not as a couple of individuals. As a country, we need to remember that helping oneself doesn’t mean we can’t also help those around us. We need to come together as a nation and spread the wealth.