China and the United StatesThe news that the GDP gap between the two countries has continued to widen in recent years is a cause for concern. This year, the GDP of the United States is likely to exceed $28 trillion, making China the world's largest player catching up with the United StateseconomyOnce again, the goal was postponed. However, what is even more surprising is that there are analysts who believe that next yearChina and the United StatesThe GDP gap will narrow, and there will be a big reversal. What exactly is causing this year and next yearChina and the United StatesThe GDP gap is so large? Is the US GDP data reliable? ChinaEconomyWhat are the prospects? These questions have given rise to deep food for thought.
1. High inflation and inflated GDP data
Since the beginning of this year, the United States has experienced the worst inflation in more than 40 years, resulting inFederal ReserveConstant interest rate hikes in response to inflationary pressures have exacerbated the United StatesEconomyThe risk of a recession. However, high inflation has pushed up the US GDP figures. High inflation has forced Americans to increase consumer spending, which in turn has boosted the final consumption component of GDP calculations. This means that GDP growth in the United States has not brought real resultsEconomyThere is a certain inflated element in the corresponding increase of benefits.
Although the GDP size of the United States is growing rapidly, this is largely a "false fire". The combination of high inflation and a stronger dollar amplify the US GDP figures, which are somewhat misleading.
2. The impact of US dollar appreciation on GDP
InFederal ReserveAgainst the backdrop of constant interest rate hikes,U.S. Dollar IndexIt continues to rise, and the GDP statistics need to be translated in US dollars. This means that the GDP of other countries, including China, is affected by the appreciation of the US dollar when converted, and is at a disadvantage compared to the United States. This is further expandedChina and the United StatesGDP gap between them.
1. The Fed's interest rate hike cycle is nearing its end
Next year,Federal ReserveIt is possible that the rate hike cycle is nearing its end and turningCut interest ratesPolicy. This will slow down the momentum of the dollar's appreciation, which will favor contractionChina and the United StatesGDP gap.
2. The decline in the inflation rate
Inflation rateThe decline is in favor of realityEconomygrowth, not the growth of virtual GDP. This year's high inflation scenario is short-term, and once inflation comes down, high consumer demand will weaken. Inflation rateThe decline is also conducive to reductionEconomyrecession risks, which in turn slows down the growth rate of US data.
At the same time, ChinaEconomywill continue to expand. The impact of the epidemic has gradually weakened, and infrastructure investment has been usedEconomyThe support for growth will continue to be strengthened. China's GDP growth is likely to be impressive next year, and the gap with the United States will begin to narrow rapidly.
So while this yearChina and the United StatesGDP gap widens, but this is likely to be a temporary "illusion". China is in reserveEconomyIt has shown potential in terms of dynamism and policy expectation strengths, and has the ability to catch up with the United States. Once the impact of the epidemic has completely subsided,China and the United StatesThe GDP gap will gradually close again, and next year is likely to be the narrowing of the gapCriticalyear.
Judging from the data, in the first three quarters of this year, China's GDP increased by 5% year-on-year2%, a faster pace, while GDP growth in the United States slowed to 24%。Still, if you convert the data to USD,China and the United StatesThe GDP gap between them has widened. This is mainly because high inflation has pushed Americans to spend more, which in turn has increased the total amount of GDP; At the same time, the appreciation of the US dollar has also led to a contraction in China's GDP when converted into US dollars.
There is reason to suspect that there is a high probability that the US GDP data will be overestimated this year. The increase in consumption brought about by high inflation is mandatory and short-term, and this part of the demand is likely to disappear after inflation comes back, rightEconomyThe contribution of the growth was limited. In addition, excessive rate hikes will also put the United States at high risk of a hard landing next year. At that time,Inflation rateDown,Federal ReserveProbably stop raising interest rates andCut interest rates, which will compress GDP growth in the United States.
In contrast, ChinaEconomyHave strong stamina. The post-epidemic recovery is like "returning to the butterfly and being reborn".EconomyActivities are resuming at a rapid pace. Compared to the United States, inflation in China is relatively stable. The central bank has continued to grow steadilyCut interest ratesThere is room for RRR cuts. This is for ChinaEconomyprovides sustained momentum and makes it possible for next year's GDP growth to be higher than this year's.
To sum up, this yearChina and the United StatesThe widening of the GDP gap is likely to be temporary. The tide could turn around next year, and China still has a chance to overtake the United States as the world's largest playereconomy。However, the premise is that China wants to stabilize growth and avoid another major epidemic orEconomyvolatility, and the United States also needs to act in a timely mannerStop loss, avoidEconomyDecline.
This yearChina and the United StatesThe GDP gap is showing signs of widening, in part due to high inflation and inflated GDP data in the United States, as well as the impact of the dollar's appreciation on GDP. However, next yearChina and the United StatesThe GDP gap is likely to narrow, mainly because:Federal ReserveThe interest rate hike cycle is nearing its endInflation rateExpected to decline, ChinaEconomywill continue to expand. The momentum of China's strong economic recovery suggests that China is poised to become the world's largest in the futureeconomy。Achieving this goal, however, will require steady growth and the right policy measures, as well as the United StatesEconomyStop the recession. futureChina and the United StatesEconomyThe situation will continue to be watched.