2023 US vs. China GDP

[RZehr]

I would have never guessed this would happen. Is this right?

The United States has overtaken China to become the world's largest economy in 2023, with a 6.3 per cent rise in gross domestic product (GDP) compared to China's 4.6 per cent gain.

It was earlier predicted that China would outpace the US in economic growth.


https://www.indiatoday.in/amp/business/ ... 2024-01-26

[Ernie]

It is not surprising to me. China's 2-year lockdown with no tourism, really did a number on the economy.

[Ken]

And the fact that the US economy is so much larger on a per-capita basis means that the gap is widening even faster. Even before the pandemic.

For example:

In 2019 the per-capita GDP in China was $10,144 and the Chinese economy grew at a rate of 6.1%
IN 2019 the per-capita GDP in the US was $65,120 and the US economy grew at a rate of 2.3%

If you do the math. The economic gap between the US and China was $54,976 at the start of 2019 ($65,120 - $10,144) but the gap between the two economies actually increased to $55,856 despite the higher growth rate in China since 6.1% of $10,144 equals a real income growth of $618 whereas in the US, 2.3% of $65,120 equals a real income growth of $1,498. In other words, in real dollars, Americans gained over twice the income of Chinese despite having a lower growth rate because they were starting from a much higher point.

Percentages can be tricky like that.

If the US is growing at a rate that exceeds China and starting from a MUCH higher place, then the disparity between the two economies is even more stark.

China would have to have sustained growth rates that greatly exceed the US for many many years in order to actually close and eliminate the gap between the two countries. You can calculate it mathematically.

In fact I made a quick spreadsheet graph to illustrate this point. If you start with the current 2023 per-capita GDP in each country and assume a constant 6% growth rate for China and a constant 3% growth rate for the US then the gap in real income between the two countries actually increases for the first 42 years (until the year 2065) and China doesn't actually catch up with the US until 67 years which would be the year 2090.

[barnhart]

China is also facing demographic realities that don't point to sustainable long-term growth. Their work force will eventually start shrinking, and less people working usually means slower economic growth.

[Josh]

China is also facing demographic realities that don't point to sustainable long-term growth. Their work force will eventually start shrinking, and less people working usually means slower economic growth.

Isn’t America facing the same demographic realities?

[Ken]

Not as much.

Here are the demographic projectsions for China between now and 2100.



And here they are for the US

[Josh]

U.S. TFR is 1.64, China's is 1.25. America is facing the exact same problem - it's just not as far along yet. (China has over a billion people, America has ⅓ of a billion.)

[Ken]

U.S. TFR is 1.64, China's is 1.25. America is facing the exact same problem - it's just not as far along yet. (China has over a billion people, America has ⅓ of a billion.)

Every developed country in the world goes through the same demographic transition. Even the Amish will do so once they run out of viable farmland and are forced to become more urbanized.

The US can manage it much more successfully than China though selective immigration. And because the US didn't intentionally suppress family size for two generations. But demographic change will take adjustments in every country in the world.

[Josh]

U.S. TFR is 1.64, China's is 1.25. America is facing the exact same problem - it's just not as far along yet. (China has over a billion people, America has ⅓ of a billion.)

Every developed country in the world goes through the same demographic transition. Even the Amish will do so once they run out of viable farmland and are forced to become more urbanized.

Are you saying the U.S. is less developed than China?

The US can manage it much more successfully than China though selective immigration. And because the US didn't intentionally suppress family size for two generations. But demographic change will take adjustments in every country in the world.

How, exactly, does "selective immigration" improve anything? If global TFR is dropping (and it is), there is a shrinking global population of people.

And no, the Amish probably won't change (particularly the most conservative groups like Swartzies or Delano Hoovers). They've managed not to change for the last 500 years, so why would they start now?

[Ken]

U.S. TFR is 1.64, China's is 1.25. America is facing the exact same problem - it's just not as far along yet. (China has over a billion people, America has ⅓ of a billion.)

Every developed country in the world goes through the same demographic transition. Even the Amish will do so once they run out of viable farmland and are forced to become more urbanized.

Are you saying the U.S. is less developed than China?

The US can manage it much more successfully than China though selective immigration. And because the US didn't intentionally suppress family size for two generations. But demographic change will take adjustments in every country in the world.

How, exactly, does "selective immigration" improve anything? If global TFR is dropping (and it is), there is a shrinking global population of people.

And no, the Amish probably won't change (particularly the most conservative groups like Swartzies or Delano Hoovers). They've managed not to change for the last 500 years, so why would they start now?

No, I am not saying that the US is less developed than China. I am saying that every country in the world goes through a similar demographic transition as they evolve from a rural agrarian economy to a more urban industrial and post-industrial economy. But each country manages it differently and some are doing a better job than others.

China and Japan are both doing a poorer job of it than the US but for different reasons. China is paying the the price for two generations if 1-child policy. Japan is paying the price because it is completely insular and would rather decline than see immigration.

As for the US? There will never be a shortage of skilled immigrants seeking to come to the US as long as the US maintains its lead in terms of technology and the economy. If the US declines and falls behind countries like Mexico in terms of per-capita income then I would expect to see immigration going in the other direction.