Who Has Better Economy US or China? A Comprehensive Comparison of the Two Global Mega Economies
The focus of this data report is to compare various variables, including GDP, inflation rates, unemployment rates, labor force participation rates, interest rates and role of central banks, of the United States and the country chosen, which is China.
China has become the second largest economy in the world, the first is the U.S., so analyzing what has happened in China over these decades would be useful for boosting the U.S. economy. The data would be demonstrated by graphs, with the U.S. first and China next. Qualitative information, such
as roles of the central bank, would be displaced with tables. Each graph and table will have a brief description right under it, which would present us with a comparison of the two countries. The description of the same variable of the two countries is co-related. Finally, there will be a table with the most recent values of each variable of the twocountries.
Graphs shown in this data report are based on data that are collected from authoritative online resources, such as the Federal Reserve Bank of St. Louis and the World Bank. All of them would be cited as footnotes.
Note: because of the length of description, the curves of the same variable are on separate two pages. It is better to look at them together with the descriptions.
Real GDP of the US
– Real GDP of the US is linearly increased, meaning the growth rate is stable. – The slope of the curve is smaller, meaning the increasing rate is slower than in China . – There are fluctuations on the curve, meaning a negative growth in GDP, but they didn’t affect the overall economic behavior much.
– The biggest drop of real GDP appeared around the year 2008.
– The total level of real output of the US is about 18 trillion dollars in 2019, bigger than China.
The Real GDP of the US: World Bank <https://data.worldbank.org/indicator/NY.GDP.MKTP.KD? locations=US> [Accessed 24 February 2021]
Real GDP of China
– Real GDP of China is exponentially increasing: almost no increase in the 1960s-1990s. However, increasing much faster since the 1990s.
– The slope of the curve has been larger since the 1990s, meaning the increasing rate is higher than in the US. – There are almost no fluctuations, meaning the real GDP is always positively increasing. – There’s no conspicuous drop in GDP.
– The total level of real output of China is about 12 trillion dollars in 2019, smaller than the US. – If the trend holds, ultimately China would surpass the US to become the largest economy in the world.
Real GDP of China: World Bank <https://data.worldbank.org/indicator/NY.GDP.MKTP.KD? locations=CN> [Accessed 24 February 2021]
– Real GDP per Capita
– The trend is very similar to the trend of Real GDP of the US, linearly increasing but relatively slow. – Level of Real GDP per capita is high, with more than $50000 per person in 2019, much higher than China. Overall living standards might also be high.
– The curve has fluctuations, with the biggest drop happening around 2008, but didn’t influence the overall living standard much.
Real GDP per capita of the US: World Bank <https://data.worldbank.org/indicator/ NY.GDP.PCAP.KD?locations=US> [Accessed 24 February 2021]
Real GDP per capita of China
– The trend is very similar to the trend of Real GDP of China, which exponentially increases relatively fast.
– Level of Real GDP per capita is not high, with only around $8000 per person in 2019, much lower than the US. Overall living standards might not be high either.
– Almost no fluctuation, meaning a continuous positive growth rate.
– Even though China could succeed in Real GDP, based on population base, it is difficult, even impossible, for China to surpass the US in the area of Real GDP per capita.
Real GDP per capita of China: World Bank <https://data.worldbank.org/indicator/ NY.GDP.PCAP.KD?locations=CN> [Accessed 24 February 2021]
– Growth Rate of Real GDP
Growth rate of Real GDP of the US (%)
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8.0% 6.0% 4.0% 2.0% 0.0%
-2.0% -4.0%
Average
3.0%
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1,9601,9651,9701,9751,9801,9851,9901,9952,0002,0052,0102,0152,020 Year
Growth rate of Real GDP of the US
– The growth rate of real GDP of the US differs a lot, and it is slower than China, same to what we observed in the real GDP curve of the US. Average growth rate is +3.0%,
– Most negative growth rates happened in the last century, only one negative growth rate in the twenty-first century around 2008.
– The US economy has remained a strong and healthy economy since the 1960s.
Growth rate of Real GDP of China
– The growth rate of real GDP of China is relatively stable, higher than the US, same to what we observed in real GDP of China. Average growth rate is +8.2%
– All negative growth rates happened in the last century.
– The economy of China was volatile during the 1960s-1990s, but has become healthy since the 1990s.
The data are calculated from the real GDP of China, so the citation is the same as the one in page 5. 9
– Recession Dates
Recession date of the US
| 1969-03-01 to 1970-11-01 |
| 1973-05-01 to 1975-04-01 |
| 1978-11-01 to 1982-11-01 |
| 1984-07-01 to 1987-03-01 |
| 1989-06-01 to 1991-09-01 |
| 1994-09-01 to 1995-12-01 |
| 2000-05-01 to 2003-02-01 |
| 2007-10-01 to 2009-05-01 |
| 2012-04-01 to 2014-02-01 |
| 2015-04-01 to 2017-04-01 |
| 2018-07-01 to 2019-12-01 |
– Furthermore, the table shows the recession period experienced by the US, there are 11 periods from 1969 to 2019.
– The longest time is from 1978-11-01 to 1982-11-01, a four-year recession. – Even though there is a recession, the general trend of real GDP of the US still shows an increase. – Since entering the twenty-first century, the total time length of the recession period in the current century is around 9 years, longer than China.
– The time of recession in the current century is generally shorter than the time in the last century, meaning the economy is stronger.
Recession Dates of the US: Federal Reserve Bank of St. Louis < https://fred.stlouisfed.org/series/ USAREC DM> [Accessed 24 February 2021]
Recession date of China
| 1978-01-01 to 1978-12-01 |
| 1980-02-01 to 1982-11-01 |
| 1985-04-01 to 1986-04-01 |
| 1988-09-01 to 1990-05-01 |
| 1994-09-01 to 1999-07-01 |
| 2000-07-01 to 2002-01-01 |
| 2007-12-01 to 2009-02-01 |
| 2011-08-01 to 2012-11-01 |
| 2014-01-01 to 2016-08-01 |
| 2019-04-01 to 2019-12-01 |
– The table shows the recession period experienced by China. There are 10 periods from 1978 to 2019.
– The longest time is from 1994-09-01 to 1999-07-01, nearly five years.
– Even though there exists recession, the general trend of real GDP of China still increases. – Since entering the twenty-first century, the total time length of the recession period in the current century is around 7 years, lower than the US.
– The time of recession in the current century is generally shorter than the time in the last century, meaning the economy is stronger.
Recession Dates of China: Federal Reserve Bank of St. Louis < https://fred.stlouisfed.org/series/ CHNRECDM> [Accessed 24 February 2021]
Inflation Rate
Inflation rate of the US
– Inflation rate of the US was high during the 1970s, where the growth rate was relatively high, but after this decade, the inflation rates were almost always below the average inflation rate, meaning the slowdown of economic growth.
– The average inflation rate is 3.3%, lower than China.
– Since entering the twenty-first century, the inflation rate is mainly around 2%, which is the target set by the Federal Reserve, central bank of the US.
– There is no deflation.
Inflation rate of the US (GDP deflator): The World Bank <https://data.worldbank.org/indicator/ NY.GDP.DEFL.KD.ZG?locations=US> [Accessed 24 February 2021]
Inflation rate of China
– Inflation rate of China was high during the 1980s and 1990s, indicating faster economic growth. There are times when inflation rate is still higher than average, meaning China is still experiencing fast economic boom
– The average inflation rate is 3.6%, higher than the US.
– The inflation rate fluctuates about the average 3.6%, which is higher than 3%, the target set by the People’s Bank of China, central bank of China.
– There was deflation in China, but it only happened in the last century.
Inflation rate of China(GDP deflator): The World Bank <https://data.worldbank.org/indicator/ NY.GDP.DEFL.KD.ZG?locations=CN> [Accessed 24 February 2021]
Labor Market
– Unemployment Rate
Unemployment rate of the US
– The highest two unemployment rates of the US are around 1982 and 2010, both nearly touching 10%.
– The average unemployment rate is 5.8%, higher than China. Moreover, this might mean lower labor participation rate.
– The curve goes up and down more frequently than China with respect to the average unemployment rate line.
Unemployment rate of the US: Federal Reserve Bank of St. Louis < https://fred.stlouisfed.org/ series/UNRATE > [Accessed 24 February 2021]
Unemployment rate of China
– The highest unemployment rate of China happened in 1978, around 5%, which is even smaller than the average unemployment rate of the US.
– The average unemployment rate is 3.5%, lower than the US. This might mean a higher labor participation rate.
– The curve goes up and down less frequently than the US with respect to the average unemployment rate line. Beginning in 2000, the unemployment rate of China is almost always higher than average, while the unemployment rate in the last century is usually below average.
Unemployment rate of China: National Bureau of Statistics of China <https://data.stats.gov.cn/ easyquery.htm?cn=C01&zb=A040N&sj=2020> [Accessed 24 February 2021]
– Labor Force Participation Rate
Labor force participation rate of the US
– The initial labor force participation rate of the US is lower than average, but since 1980, it has risen above the average line and increased until around 2008. Then the rate decreases. The overall curve is similar to a parabola.
– The highest labor force participation rate reached was around 67% around 1998, but still lower than the average labor force participation rate of China, which is 74.1%.
– Average labor force participation rate of the US is 62.9%, smaller than the lowest rate of China.
Labor force participation rate of the US: Federal Reserve Bank of St. Louis <https:// fred.stlouisfed.org/series/CIVPART> [Accessed 26 February 2021]
Labor force participation rate of China (%)
Labor force participation rate of China
– The initial labor force participation rate of China is higher than average, but always has a negative slope, meaning a continuous decrease. Since 2003, it has been below the average line. The overall curve is similar to a line.
– The highest labor force participation rate China has reached is nearly 80% around 1990, higher than the US.
– Average labor force participation rate of China is 74.1%, higher than the US. – Both countries have experienced a decrease in labor force participation rate since the new century began.
Labor force participation rate of China: Sina Finance <https://finance.sina.com.cn/worldmac/ indicator_SL.TLF.CACT.ZS.shtml> [Accessed 26 February 2021]
Interest Rate
Discount rate of the US
Average 4.3%
– The highest discount rate of the US nearly touched 15% around 1982, then it decreased a lot, but is still not above average until almost a decade.
– The curve has a general trend of increasing the discount rate first, and when it reaches the top, it decreases.
– The average discount rate of the US is 4.3%, smaller than China.
– The discount rate for the past decade never goes above the average.
Discount rate of the US: Federal Reserve Bank of St. Louis <https://fred.stlouisfed.org/series/ INTDSRUSM193N> [Accessed 27 February 2021]
Discount rate of China
Average 4.7%
– The highest discount rate of China was over 10% around 1996, smaller than the US, then it also decreased. In 5 years time, it decreased lower than the average.
– Furthermore, the curve has a general trend of decreasing the discount rate, after the highest in 1996. – The average discount rate of China is 4.7%, higher than the US.
– Moreover, the discount rate for the past two decades never rose above the average.
Discount rate of China: Federal Reserve Bank of St. Louis <https://fred.stlouisfed.org/series/ INTDSRCNM193N > [Accessed 27 February 2021]
Role of Central Banks
Role of Central Bank in the US
| Conducting the nation’s monetary policy, such as setting a discount rate and controlling the long run interest rate. Target long run fund rate: 0% to 0.25% |
| Helping maintain the stability of the financial system |
| Supervising and regulating financial institutions |
| Fostering payment and settlement system safety and efficiency |
| Promoting consumer protection and community development |
| specific mandate: 2% inflation while maximize sustainable employment |
| Last lender |
Role of Central Bank in China
| Attend and give advice in financial policy making, system innovations and future financial development of China. Decrease IEOR from 0.72% to 0.35% in 2021. |
| Control money supply to ensure stability of the financial system. |
| Supervising bond market, gold market, etc, between banks. |
| Set policy regarding to exchange rate, maintain balance of payment |
| Prevent laundering money and maintain the safety of the financial system and consumers. Set inflation goal around 3% |
| Mandate: the formulation and implementation of monetary policy under the leadership of the State Council. |
| Last lender. |
The Federal Reserve of the US set goals more generally than the goals set by the People’s Bank of China, but for most part, the roles played by these two central banks are the same. The only exception is that China’s central bank supervises the exchange rate as well.
Role of the US central bank: Federal Reserve of the United States <https://www.federalreserve.gov/ faqs/what-economic-goals-does-federal-reserve-seek-to-achieve-through-monetary-policy.htm> [Accessed 27 February 2021]
Role of China central bank: People’s Bank of China < http://www.pbc.gov.cn/rmyh/105226/105436/
index.html > [Accessed 27 February 2021]
Conclusion
The data report focuses on how China and the United States experienced different patterns of trend. This could tell us what the difference between the US economy and the economy of China is. From the graphs, we learned that China is experiencing a faster economic growth with higher labor force participation rate and lower unemployment rate than the US. With this trend, it is possible that China would become the biggest economy one day. However, the country also experiences the side effects brought by the fast economic boom, such as higher inflation rate and the too low GDP per Capita. Hopefully reading the data report brings you some new ideas toward the economies of China and the US.
The table below contains the most recent value of the two countries, just to provide more straightforward comparison.
(Note: the real GDP of the US is in constant 2012 US $, different from China using 2010, but the difference is not too big to influence the result)
Values with the most recent value of the two countries
| The United State | China | |
| Real GDP (trillion $) | 18.4 (2020) | 11.5 (2019) |
| Real GDP per capita ($) | 55800 (2020) | 8255 (2019) |
| Real GDP Growth (%) | 0.67 (2020) | 6.1 (2019) |
| Recession date | 2018/7/1-2019/12/1 | 2019/4/1-2019/12/1 |
| Inflation rate (%) | 1.9 (2019) | 1.6 (2019) |
| Unemployment rate (%) | 8.1 (2020) | 4.2 (2020) |
| Labor force participation rate (%) | 62 (2020) | 68 (2019) |
| Discount rate (%) | 0.25 (2020) | 2.9 (2020) |
