The 70% curse refers to the fact that when a country's GDP reaches 70% of that of the United States, the United States will use various means to suppress its development.
Historically, it is difficult to calculate the GDP level of the Soviet Union when it collapsed, and in 1995, Japan's GDP accounted for 72% of the United States, and then fell into a 20-year recession due to the Plaza Accord and other reasons. In 2021, China's GDP accounted for 77% of the United States, falling to 70% in 2022. This seems to verify the existence of the "curse".
The so-called "Plaza Accord" was an agreement reached at the Plaza Hotel in 1985 to harmonize the exchange rates of the currencies of the major industrial countries. At that time, the Japanese economy took off, and the appreciation of the yen put a lot of pressure on U.S. exports.
As a result, the United States and Japan reached an agreement, and the yen appreciated sharply against the dollar. This directly led to the bursting of Japan's economic bubble, which stagnated for 20 years.
Now the United States is taking a similar approach, keeping the dollar index high and suppressing other currencies by constantly raising interest rates. This allows us to see that the gap between the GDP of China and the United States in 2021 was only 5 trillion US dollars, and it has widened to 7 trillion in just one year.
Changes in exchange rate factors in GDP calculations have left China's results grossly underestimated in nominal terms.
The United States has never stopped suppressing potential challengers. In the 80s of the 20th century, the United States launched a crazy suppression of the Japanese chip industry, and now, the sanctions against Huawei are also becoming crazy.
I remember that in 2019, Huawei was cut off by Google overnight and could not get Android system updates.
But China's economy is still resilient for two reasons: first, China has the world's most complete industrial system and industrial chain, and various industries can support each other, and second, the huge domestic demand market formed by 1.4 billion people does not allow us to rely too much on exports.
In the first quarter of this year, China formed a surplus with South Korea, which marks a major breakthrough in China's semiconductors and other fields, and it has been able to partially achieve self-sufficiency.
However, the United States will not easily give up its status as the world's number one power. There are expert warnings,The U.S. may revise the way GDP is calculated, by injecting water into fat data.
More seriously, the United States is trying to maintain the hegemony of the dollar by constantly raising the ceiling of the national debt to "harvest" global wealth.
In 2022, Yellen proposed raising the U.S. debt ceiling to $51 trillion by 2033. This will undoubtedly drag countries around the world into economic crisis and debt. Therefore, "de-dollarization" is imperative, otherwise the financial game of the United States will rage around the world.
At present, the widening gap between China and the United States in GDP is more like a game of operation. The U.S. took advantage of high inflation and a strong dollar to gain a short-term advantage on the data. High inflation is driving up GDP on the one hand, and eating into real incomes on the other.
Americans are using borrowed future revenues to prop up immediate prosperity. And once the Fed pivots to cutting interest rates, the dollar will depreciate sharply. In the industry, the strength of the US dollar will come to an end in 2024, and the RMB will also appreciate. This could be the prelude to a major economic reversal between China and the United States.