The economic gap between China and the United States is getting wider and wider
While it may seem a bit "counter-common sense", looking at the data, it seems that this is exactly what happened:
In 2021, the US GDP was 2332 trillion US dollars, China's GDP 1773 trillion dollars, a gap of 559 trillion dollars;
In 2022, the GDP of the United States was 2546 trillion US dollars, China's GDP is 18 trillion US dollars, and the gap has widened to 7$46 trillion.
By the end of this year, the U.S. economy grew by 2 percent year-on-year in the first three quarters4%, China's economy increased by 5 percent year-on-year2%, if this trend continues, the GDP of the United States in the first three quarters has been close to 21 trillion US dollars, and it is likely to reach 28 trillion for the whole year, and the gap may be further widened.
What's going on?Why is it that China's annual economic growth rate outperforms that of the United States, but the GDP gap is not only not narrowing, but is increasing?
In fact, the core reason for the widening economic gap between China and the United States is that the inflation problem in the United States has brought about inflated GDP.
Here we must first understand the difference between nominal and real growth rates.
To put it simply, the nominal growth rate is to see how much the number of banknotes corresponding to what is produced has increased, while the real growth rate is to see how much the things produced have actually increased.
When countries around the world count GDP, they all count nominal GDP data, and because there is no removal of the ** factor, it often contains a lot of water.
This question is not difficult to understand, for example, you are an American air conditioner manufacturer, the annual output is 1,000 units, the year before last, each air conditioner ** sold for 500 US dollars.
But last year, inflation in the United States soared, and all kinds of daily necessities for food and clothing have risen, and employees have asked for wage increases, and the purchase of raw materials** has also risen wildly, so you have no choice but to raise the air conditioner ** to $1,000 per unit.
From the perspective of GDP, although the physical quantity of consumption has not changed, because the ** of each air conditioner has risen, the contribution of GDP will also increase significantly.
Thus, the US GDP in 2022 is 25$46 trillion, GDP in the first three quarters of this year was close to $21 trillion, largely because of prices**, due to the inflation factor brought about an increase in nominal GDP, that is, the so-called"If the growth rate is not enough, inflation will make up for it".。Compared with the United States, China's CPI data has been maintained in a very flat state, and this year it even reached the verge of deflation, so although the gap between China and the United States GDP data has further increased, in fact, this does not reflect the real economic gap between the two countries.
In addition to inflation, in terms of exchange rate, in fact, we are also at a loss when comparing GDP with the United States.
When countries around the world calculate their GDP, they will use the dollar as a unit, but don't forget that the United States has been raising interest rates since the beginning of 2022 due to the epidemic, and there are no signs of pause until the second half of this year.
As a result of the frenzied interest rate hikes in the United States, the dollar continues to strengthen and other currencies continue to depreciate, which has led to a certain decline in other countries when converting GDP into dollars.
For example, the same is 100 trillion yuan, if it is 1:6The exchange rate of 3, converted into US dollars is 1587 trillion dollars, which can be calculated according to 1:73, the result is 13$69 trillion, a difference of more than $200 million. Last year and for a long time this year, the renminbi was under pressure, so this depreciation of the exchange rate is also one of the "culprits" of the widening economic gap between China and the United States.
Of course, if we look at the exchange rate from the point of view, we are actually relatively optimistic about the future GDP situation.
Now that the dollar interest rate hike cycle is coming to an end, the market's expectations for the Fed's interest rate hike have been greatly reduced, and on the 28th of last month, the dollar index ** to 10275, the lowest since August, the dollar, which has been strong for a whole year, has a tendency to weaken.
As the United States ends its interest rate hike cycle in the future, or even begins to cut interest rates, the dollar index is bound to continue to decline, and when the RMB exchange rate strengthens, the GDP gap between the two sides will narrow.
According to the CME's "Fed Watch Tool", the probability of the Fed continuing to raise interest rates in December has dropped from 14% to 0%, and the probability of raising interest rates in January next year has also fallen from nearly 30% to 2%, and the expected probability of a 100-125 basis point rate cut by the Fed in 2024 has increased from nearly 30% to more than 50%.
Not only that, but Christopher Waller, an important Fed official, also published an article saying"If inflation continues to decline steadily, the Fed could decide to cut its benchmark interest rate as early as the spring."
You know, in fact, this Waller is a "hawkish" Fed**, and the Fed, which has always been hawkish, will release such a clear dovish-biased signal, which in itself can explain part of the problem.
So judging from the actual situation at the moment, it is almost a sure thing that the Fed will end its interest rate hikes.
The reason why the Fed will choose to end its interest rate hikes is not because it has brought inflation under control to the expected 2% target, and the US CPI increased by 3% year-on-year in October2%, although 3 more than expected3% less 01 percentage point, but the situation is still not optimistic.
On the contrary, inflation remains highHowever, in the face of the deepening fiscal crisis, the size of the US debt continues to soar to $33 trillion, and the Fed has lost room for further interest rate hikes.
The U.S. fiscal deficit in fiscal year 2023 has reached a high of 1If interest rates continue to rise at 7 trillion US dollars, it will inevitably bring higher pressure on interest repayment, and the further expansion of the fiscal deficit in the future will in turn aggravate the problem of fiscal deficit, which is equivalent to forming a vicious circle.
Fiscal problems have further intensified, inflation has not been effectively controlled, and the outlook for the US economy is far from as bright as it seems.
Write at the end:
Although GDP data is indeed an important indicator to measure the level of economic development of a country, only looking at GDP data often has certain limitations and does not match the actual situation.
The most important thing is to raise the living standards of the people, and just injecting water into the GDP data will not solve any problems. Kunpeng Project