Heading into 2024, the pace of China's economy seems to have slowed down temporarily. The just-released GDP data for the first quarter shows that China's GDP growth rate is 5. 3%, but in dollar terms, China's GDP is only 60% of the GDP of the United States, a significant decline compared to the same period last year.
This number is undoubtedly dizzying. Is China's economy on its way to collapse, or is it just a temporary pain? Is the world's second-largest economy, once highly anticipated, being rapidly overtaken by new challengers?
True, 5. The growth rate of 3% is still the best in the world. However, compared with the soaring growth of China's economy in the past, this figure inevitably raises concerns about the prospects of China's economy. Not to mention, the comparison with the U.S. economy has undoubtedly added to this concern.
However, economic data is often just the tip of the iceberg, with a complex set of factors behind it. It is easy to fall into the mistake of one-sided understanding by sticking to GDP figures alone. It is necessary to look beyond the superficial figures to examine the underlying causes of the economic gap between China and the United States.
First, the difference in inflation levels has become the main "accomplice" to widen the GDP gap. While high inflation stimulates nominal GDP growth, it also masks the true state of the US economy to a certain extent. In contrast, China's economy, after last year's peak inflation, is now experiencing a decline in price growth, allowing GDP growth to come more from real output growth.
Second, exchange rate fluctuations are undoubtedly an important factor affecting the GDP gap between the two countries. The renminbi has recently depreciated against the US dollar to a certain extent, which has made the US dollar value of China's GDP relatively small. As the main international reserve currency, the strong position of the US dollar has further exacerbated the depreciation pressure of the RMB, forming a vicious circle.
Third, changes in the global supply chain pattern have had varying degrees of impact on the economies of the two countries. As a major manufacturing country, China's unstable supply chain has put pressure on its exports and domestic demand. The United States, with its strong domestic demand market and technological innovation capabilities, has more room for maneuver in dealing with supply chain shocks.
In addition, the differences between China and the United States in terms of monetary policy and industrial structure, as well as the influence of geopolitical factors, all affect the changes in the GDP gap between the two countries to a greater or lesser extent.
Therefore, we cannot simply judge the "strong" and "weak" Chinese economy from the GDP gap between China and the United States. After all, the economy is a huge and complex system, and it is difficult for any single factor to determine its final direction.
In the long run, there is still a lot of potential for China's economic development. Maintaining a high level of investment in human capital, continuing to deepen reform and opening up, adhering to independent innovation in science and technology, and actively integrating into the new global industrial division of labor will inject new impetus into China's economic continuity.
It is still unclear whether the U.S. economy will really be "unbeatable." What impact will high inflation and high interest rates have on its economic trend, and whether the development of new technology industries will continue to boost economic growth? These questions remain to be seen.
There is no doubt that China and the United States are embarking on a path full of uncertainties and opportunities. The release of GDP data has certainly attracted attention from all walks of life, but it is more like an intermission, allowing us to see the score, but it cannot fully determine the final result.
There is still a long way to go, and China and the United States are undergoing a profound change in the economic landscape, but who will really break out of the encirclement and become the final winner remains to be tested by the policy choices and economic performance of the two countries. The current GDP gap is just a small episode in this protracted marathon, and what really attracts attention is whether the two can hold on to the finish line and who will emerge victorious.
So it's too early to tell. Let's wait for time to see if the leader can finally shake off the fog and find the right direction.