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Comparing and Contrasting Chinese GDP and US GDP

Introduction
The rapid economic growth in China over the last three decades has prompted many economists and researchers to focus on studying the country’s growth tends as an indication of its future. In fact, China’s economy and economic growth rates have overtaken members of the European Union and Japan, making it the second largest economy in the world after the US. Therefore, most studies have focused on comparing the Chinese economy and growth with that of the US. The purpose of this paper is to analyze the economic growth rate of china in comparison to that of the US, with a special focus on comparing and contrasting the GDPs of the two countries between 2005 and 2012.

Comparing China’s GDP and American GDP between 2000 and 2005

Since 2000, the economy of china has been on the rise, with a rapid economic growth indicated by high rates of GDP and FDI. When considering GDP growth factor, it is evident that the country’s economy has risen at a very fast rate. By 2000, the country’s average GDP was about 9.9% (Zicheng 78). By the start of the decade in 2000, China’s economy started showing the possibility of overtaking several countries in the G8 group. First, the GDP growth rate started improving from its lowest in 1999, recording an increase from 6.3 % to 10.6% (Tong 121). In fact, the 1999 GDP was the worst since 1980, which means that an increase of 4% in the GDP between 1999 and 2000 shows significant progress in the economy (Zicheng 92). In addition, the country’s growth in terms of PPP increased from 9.2% in 1999 to 10.2% in 2000, which translates to a real GDP growth of 8.3%. Since then, China focused on various initiatives to improve its economy over the next one decade. In 2011, China’s GDP remained strong but relatively stagnant because the country was identifying and implementing initiatives for growth (Zicheng 129). For instance, GDP growth based on UDS (%) was 10.5%, a slight decrease from 10.6% recorded in the previous year. However, between 2001 and 2005, the country achieved a sharp annual increase in the GDP growth rate (Tong 128). For instance, in 2002, it improved by only 0.1% from 10.7% to 10.8% but reached 12.9% in 2003. The annual GDP growth rate was about 16.9% in 2005 and was expected to improve in the coming years (Zicheng 147). Similarly, the country’s PPP improved significantly between 2001 and 2005 by improving from 8.4% in 2001 to 14.3% in 2005. Therefore, it means that the country achieved an overall growth in the real GDP, making it reach 11.3% in 2005 from 8.3% recorded five years earlier (Tong 137). This recorded growth in this period marked the begging of a rapid economic growth for China, which also placed the country at a point that attracts wide economic and political attention.

Comparing the economic growth for China between 2000 and 2005 with that of the US at the same period, a number of differences are identifiable. In the case of the US, the rate of growth has been changing significantly over the last 15 years. At the end of the 20th century, the country was recording an annual GDP of about 3.8% (Strawser 54). Nevertheless, it reduced to 3.0% in 2000 (Strawser 63). By 2001, America’s GDP had reduced to 0.1%, an indication of the effect of international politics and terrorism on the economy. In fact, the 9/11 terrorist attacks on the American soil affected the economic growth rate and accounts for the rapid fall in the GDP per capita. However, the economy started a slow but progressive recovery. For instance, it improved from 0.1% in 2001 to about 0.8% in 2002 before jumping to 1.6% in 2003 (Strawser 108). Similarly, the GDP growth rate increased over the next few years, reaching an average of 2.1% by the end of 2005.

These figure provide an important platform for comparing and contrasting the US and Chinese GDPs as indicators of economic growth rates in the two nations. It is worth noting that the GDP performances in the two countries were different between 2000 and 2005. For instance, it is evident that the GDP growth rate was higher in China than in the US because the average growth rate in China was about 6.75 compared to 1.2% in the US. In addition, while China’s GDP rate started the millennium with a boom (rising from 8.3 to 24.5% in 2005) the American GDP recorded a poor performance in the early days of the century. In fact, the two countries compare significantly because America was recording a constant growth rate, while that of China was increasingly sharply every year.

A number of issues may explain the differences. For instance, while the US was carrying out its military, security and international policies, the Chinese government was more focused on economic development by reaching out to foreign nations and regions for trade partnerships.

Comparing China’s GDP and American GDP between 2006 and 2011

In this period, China recorded the highest economic growth levels in its history. In fact, this period caused mass debates over the policies adopted by the country and the impact of rapid economic growth rates on the country’s future. In addition, the period progressively saw the country replace UK, Germany and finally Japan from their positions as the fourth, third and second biggest economies respectively.
The Chinese GDP grew rapidly between 2005 and 2008, but the world economic crisis caused a slight reduction in the rate of growth. Between 2005 and 2006, the GDP growth rate increased from 16.9% to 20.2%, but within one year (2007), it had reached 28.8% based on USD (United Nations Publications 71). Similarly, the purchasing power parity for China increased from 14.2 in 2005 to 17.5 in 2007. These indicators translate an overall change in the rate of real GDP growth from 11.3% in 2005 to 14.2% in 2007. In addition, China’s GDP reached its maximum growth rate in 2008 when it hit a 29.4% mark with a corresponding PPT rate of 12.1%, but the real growth rate of GDP indicated the first reduction from 14.2 to 9.6% (United Nations Publications 98). The global economic crisis was at its peak, affecting several nations across the world. In addition, most other nations, especially the west, were increasingly pressuring China to change its economic policies in order to reflect the actual growth and rates of the Yen in comparison to the US dollar. By 2009, the economic crisis had already hit China, which caused a decline of the GDP growth rate from 29.4% in 2008 to 10.4% in 2009. The country recorded a PPT rate of 10.2%, which translates to a 9.2% rate of real GDP growth (United Nations Publications 203).

However, it is worth noting that the country’s economy was one of the few in the world that recorded a high rate of recovery from the crisis. Within one year, the Chinese GDP started increasing again is recording a growth rate of 18.8%, a PPT rate of 11.9% and a real GDP of 10.4%. In 2011, the country’s GDP growth rate hit 23.5%, while the PPT rate was 11.6%. This is an indication that China’s economy suffered slightly during the global recession, yet some nations in the western world were hit and had to seek funds from China and other international institutions. The Chinese economy remained relatively strong during the recession.

Several differences are observed when the above information on China is compared with America’s GDP status between 2006 and 2011. For instance, between 2005 and 2009, America’s GDP progressively went from a positive to a negative figure, which caused massive debate over the country’s future position as the world’s largest economy. While it is clear that China’s GDP was averaging at about 18%, the American GDP was sinking every year. In 2005, the GDP was about 2% but reduced slightly to 1.7% in 2006. In 2007, the decline persisted, with the GDP rating at 0.8%. In fact, this was an indication that the American economy was headed for a crunch. Within one year, the figure decreased by a large margin, with the new GDP standing at -1.3%. At the height of the recession in 2009, it was clear that the world’s largest economy was in trouble because it reached an all time low of -3.9%. The economy was going down at a very fast rate, yet the economies of some countries like China and India were recording positive rates. America had to do something to sustain its economic growth. However, by 2010, the first signs of recovery were appeared when the GDP increased from -3.9% to 1.6% (United Nations Publications 76). However, it was not possible to maintain the growth rate at a time when the European Union and other nations in the west were beginning a new crunch. This affected America’s economy, with the growth rate reducing slightly to 1.1% in 2011.

Conclusion

From these comparisons, it is clear that there were large differences between the GDP rates in American and China. While the Chinese GDP rates remained competitively high, America’s economy declined significantly over the decade, which culminated into a recession between 2007 and 2009. In addition, the recovery rates are different because China is able to recover within a short period compared to the US.
 
Works Cited
Strawser, Cornelia. Business Statistics of the United States 2010: Patterns of Economic Change. New York, NY: Bernan Press, 2011. Print
Tong, Junie T. Finance and Society in 21st Century China: Chinese Culture Versus Western Markets. New York, NY: Gower Publishing, US, 2011. Print.
United Nations Publications. Trade and Development Report 2011: Employment, Globalization and Development. New York, NY: UN Publications, 2011. Print
Zicheng, Ye. Inside China’s Grand Strategy: The Perspective from the People’s Republic. Lexington, KY: The University Press of Kentucky, 2012. Print.

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