As Li Keqiang said in the World Economic Forum last 2015, “It must be pointed out that China is still a developing country and still has a long way to go before achieving modernisation”. Recently, the idea that China can overpower the US has been introducing discussions and doubts. It can only be determined by their economic strength and with what the Chinese economist has said; China still has a long way to go.
It is quite questionable to compare the economy of two nations with scales that don’t match. In the case of the powerful China and the US, both have extremely different ranges of labor cost. This is an essential consideration in determining the economy of a nation. Other factors include the growth rate in which the US is greater with 10% in contrast with China having 9.3% growth rate. In a decade, China can take the lead and by two decades, China may double the economy of the US.
This can be an ideal situation for China as considered a developing nation. However, the event that brought China a better economy was the beginning of the economic reforms. This occurred in 1978 and since then, rapid changes were seen. Productivity has improved along with the increase of agricultural activities. Nationals also moved to urban areas and started working for the companies.
The US owns 22.44% of the gross world product which makes them on top with the basis of the Gross Domestic Product or GDP. However, China is ahead based on the Purchasing Power Parity or PPP which makes it the greatest economy in the world. With PPP, the comparison is set based on the value of money even when used in a different country; the adjustments are done for equal footing.
As a matter of fact, the worth of China’s economy is already greater than the US. Considering other aspects such as education, China improved through its government’s funding for the students being ahead of the US for a little less that 100 million enrollees. On the other hand, the US has its priorities in health care giving more expenses to the welfare of their people. Additionally, the cost of living in the US is much more expensive than China.
The growth of China is quite promising and the US is keeping themselves on defense as the largest economy in the world. The present administration of the US wants to target 3% growth rate from 2016 to match the fast growth of China. However, being an established economy does not guarantee rapid growth, unlike developing countries who has more space for improvements. It may be quite difficult for the US to tap more opportunities for growth that they haven’t reached onto before. The US, being a powerful economy can only do so much and it is inevitable that other countries, specifically China, are catching up.
China had changes in their economy for a long time and it started when the series of battles ended. It included the Sino-Japanese war where specifically the Nanking Massacre affected a huge population; it was then followed by the World War II and the civil war. China experienced inflation then but when everything else was cleared and settled, their currency was changed. Meanwhile, the US is already considered powerful at these times.
The US has been the most powerful for the longest time and it will become a challenge to compete with. However, with the competencies that China has shown, remaining on the number one spot would need stronger and wiser strategies. All the possibilities for economic growth must be given attention to further increase their ratings and hopefully, be always greater than the other countries like China.