Comparison of Macroeconomic Status of United States and China

At the beginning of the 21st century, most countries in the world were struck by rapid fluctuations of economic conditions that threatened their economic stability (Barisik & Tay, 2010). Whereas these economic instabilities have passed, their impact continues to affect most countries in the world. Some of the economic areas affected include; gross domestic product, gross national product, the rate of inflation, interest rates, unemployment rate and type of unemployment, national debt, total export and import of a country and the bilateral exports and imports between different countries (Banerjee & Nag, 2011). This paper provides comparative insights on macroeconomic statuses, reasons and the consequences due to past economic crisis of two counties, United States and China. The data shown below is generated from both the IMF (International Monetary Fund, 2018) and Trading Economics databases (Trading Economics, 2018).

Economic Indicator/Year

2013

2014

2015

2016

2017

US

China

US

China

US

China

US

China

US

China

GDP (B$)

16,691.52

9,607.22

17,427.61

10,482.37

18,120.71

11,064.67

18,624.48

11,190.99

19,390.6

12,237.7

GNP (B$)

15,600

8,545

16,000

9,603

16,400

10,466

16,700

10925

17,100

11158

Inflation Rate (%)

1.8

2.1

1.6

2.6

0.0

1.0

1.6

1.9

2.2

2.3

Interest Rates (%)

0.3

6.0

0.3

6.0

0.3

5.6

0.5

4.4

0.6

4.4

Unemployment Rate (%)

8.0

4.1

6.7

4.11

5.8

4.1

4.9

4.05

4.4

4.04

National Debt (M$) ‘000

16,000

8.631

17,500

17.799

18,000

13.829

19,000

14.206

20,000

17.106

Total Export/Import ‘000

190/230

1.350/1.4

195/235

1.7/1.6

196/236

1.55/1.2

180/220

1.5/1.1

191/218

1.8/1.4

Bilateral Export and Import (B$)

123/465

370/155

125/480

390/160

117/510

415/152

116/475

385/136

132/530

­_

For the last five years, both the US and China has witnessed an improvement in their GDP. The improvement is attributed to the fact that the two countries are recovering from the past economic crisis and their economic growth has been inevitable given their global position in the trade.

Just like GDP, the GNP for both countries has improved due to increased global demands for various products and their global recognition in trade. The GNP increases are due to increasing multilateral trade between different countries.

In the US, the inflation rate decreased up to 0.0% in 2015 and then rose steadily to 2.2% in 2017. Similarly, the inflation rate rose in China and then reduced to 1.0% in 2015 and then increased to 2.2% by 2017. According to Ciżkowicz & Rzońca (2013), the increase in inflation is triggered by sustained increases in crude oil prices, foodstuffs, and other commodities.

Before 2016, the interest rates in the US were relatively steady and low compared to those in China which has remained higher. Consequently, lower interest rates in the US have been to encourage investment in the country while in China higher rates are aimed at protecting their industries.

Although the rate of unemployment has been higher in the US, it has been decreasing for the last five years from 8% in 2013 to 4.4% in 2017 while in China the rate of unemployment has remained relatively steady for the last five years.

The US continues to experience a rise in the national debt due to inevitable events such as natural disasters and wars for the last five years compared to China whose national debt is lower with notable minor fluctuations in the last five years.

There are no significant increases in exports and imports for the US in the last five years, mainly caused by competition from other countries such as China, whose exports continue to increase due to its low price offers. Also, the US imports more products than it exports to China while China exports more to the US than it imports from the US.

References

Banerjee, R., & Nag, R. N. (2011, September). Globalization, Labour Market Segmentation, Unemployment and Wage Inequality: A Theoretical Analysis. Journal of Economic Integration, 26(3), 578-599.

Barisik, S., & Tay, A. (2010). An Analysis of Financial Crisis by Early Warning Systems Approach: the Case of Transition Economies and Emerging Markets (1994-2006 Period Panel Logit Model). International Journal of Economic Perspectives, 4(2), 403-426.

Ciżkowicz, P., & Rzońca, A. (2013). Does Inflation Harm Corporate Investment? Empirical Evidence from OECD Countries. Economics, 7(1). Retrieved from http://dx.doi.org/10.5018/economics-ejournal.ja.2013-16

International Monetary Fund. (2018, July 08). IMF Data. Retrieved from International Monetary Fund: http://www.imf.org/en/Data

Trading Economics. (2018, July 08). Economic Indicators. Retrieved from Trading Economics: https://tradingeconomics.com/