China and the U.S. – A Reminder
The e-biztrends.com November 25, 2018 Blog entry, “2020 and Beyond, (Not AI)”, addressed the importance of Asia’s economy, so that a reminder of the differences between the largest Asian economy and the U.S. might be in order. Referencing published World Bank statistics as a basis, China dominates certain economic indicators while the United States dominates in others. At 1.4 billion, the population of China is more than four times the size of the United States population. In China, Gross National Income (GNI) in US dollars as of 2017 was $12.043 trillion and doubled the amount reported for 2010. Gross Domestic Product (GDP) in 2017 was $12.238 trillion, again doubled from the 2010 level. Reported values in 2017 for the United States were $18.980 trillion in GNI, or a 25% increase from 2010 and $19.391 trillion in GDP, or a 30% increase from 2010. Per capita, GNI in China of $8,690 doubled from its 2010 value while the United States per capita GNI of 58,270 increased by 19% from its 2010 level. Economic growth rates in China exceeded those in the United States from 2010 to 2017 for the three indicators while the size of the U.S. economy, as well as the standard of living in the U.S., continued to exceed these indicators for China.
Tariff negotiations attack the inequities in trade, however, and seek to redress practices where access to markets between two countries is not free and fair. In 2018, the U.S. trade deficit in goods with China amounted to $344 billion. The trade deficit is of course not new but highlights the U.S. consumer’s desire for technical products, clothing, consumer goods, and other items manufactured in China and priced attractively, given the U.S. consumers’ disposable income levels. Demand for U.S. production in China depends not only on lifting trade protections in China but on the ability of the Chinese economy/consumer to afford U.S. goods. Adding to the complexity of this topic is the contrast between a Centrally Planned Economy (China) and a market economy (U.S.), and exchange rate variability. China and the United States hold vastly different economic profiles, and the disparities demand examination from time to time when considering ongoing trade policy discussions.