How China's Development Will Affect The US and the World:

Introduction:

The world has entered into a new historical era. The US won’t be the leader of the world anymore. What’s the reason? How will China’s development affect the US and the whole world in the future?

 

Is China going to become a superpower? Is it going to overtake the US or is its development just a phase? Will China's growth turbocharge their markets or will they stumble along the way? Let me show you how China's economy and markets will affect the US and the world in a few decades.

 

In 1960, Mao Zedong famously said that "the Chinese people have stood up." In the sixty years since China's development has shocked the world. From a nation marked by scarcity to one of wealth. From a country where starvation was prevalent to one of gluttony. The progress is unlikely to cease. But what will it mean for the US and the world? Will China be more isolationist or more globalist? Will it project its power abroad or stay within its borders? What will be the impact of China's development on its economic model and political structure? 

 

China has, in just a scaled few decades, going from a backward, isolated, and impoverished country to a global economic and political leader. Its economic model is unusual, involving state-owned enterprises and an integrated government, and the relationship between its business community and government is unheard of in other countries.

 

But it has worked remarkably well. There’s no doubt that China will continue its meteoric rise to become the most powerful nation the world has ever seen.

 

There are few countries in the world as formidable and powerful as China. Yet, the US still remains ahead of it by far. In this article, I will provide an overview of what is required for China to develop further, and how it can affect the US - both economically, and geopolitically.

 

In recent decades, the World Bank and International Monetary Fund have pointed to China's overly centralized government as the cause of its inability to take advantage of the new opportunities provided by globalization. That is, China has not taken advantage of globalization because its government is still very communist. What they were unaware of, however, was that after reforms in 1998, China began to develop at an accelerated pace.

 

The Chinese have long been admired as a race that can accomplish what they set out to do. When the plan is conceived and built by the government, the economy takes off and China’s progress is hailed around the world. This began in 1978 when Deng Xiaoping took control of the country with his "Four Modernizations" – agriculture, industry, defense, and science and technology.

BRIEF DETAIL ABOUT HOW CHINA'S DEVELOPMENT WILL AFFECT THE US AND THE WORLD

The Global Economic:

The global economic and political system that has been in place since the end of World War II is experiencing a profound shift. The rise of China as an economic power, coupled with President Donald Trump's commitment to an "America First" policy and his criticism of other countries for "freeloading," means that the United States is no longer the world's dominant force on trade.

This means that how China chooses to develop will have a major impact on the United States and the rest of the world, both directly and indirectly.

 

China has become one of America's largest trading partners, but it has also become one of its biggest competitors. As China grows, it will increasingly compete with American companies in overseas markets, particularly in developing countries.

The U.S.-China Trade:

The U.S.-China trade deficit is at an all-time high and is likely to continue growing. The deficit was $375 billion last year. In 2016, President Barack Obama warned that this would lead to problems for U.S. workers and businesses as China becomes more competitive in exporting goods and services around the world.

 

The Chinese government has taken steps to control its currency and increase exports by devaluing its currency, making it cheaper for Chinese goods to be sold abroad.

 

Interesting Elements About China:

1. China's population is 4 times larger than the U.S. (1.4 billion vs. 350 million).
2. China is the world's 3rd largest country in land area (9.6 million square kilometers).
3. China has the world's 2nd largest economy by GDP ($14 trillion) and the 2nd largest by PPP ($17 trillion).
4. The U.S.'s economy is $20 trillion, or 15% larger than China's, but China is growing much faster than the U.S.
5. China accounts for half of the global growth in 2018 and 2019, according to the World Bank.
6. China is America's biggest trading partner and buys more than $100 billion in American goods annually.
7. In 2017, China had a trade surplus with the U.S. of $375 billion and a services deficit of $38 billion, according to the Treasury Department.

 

Chinese Economy:

China's economy is likely to overtake the United States in size as soon as 2020.

This will happen because China's economy is growing at a far greater rate than America's.

It will be the first time in 160 years that the US isn't the world's largest economy.

The UK-based Centre for Economics and Business Research (Cebr) predicts that by 2032, China's economy will be worth $34.1 trillion (£25 trillion), compared to the US's share of $32.4 trillion (£23.9 trillion).

What does this mean for the rest of us? And what does it mean for China?

We asked experts to predict what might happen once China overtakes the US.

 

China's economic growth has been nothing short of spectacular. Gross domestic product per capita, in purchasing power parity terms, grew almost 20-fold from $1,000 in 1980 to $19,000 in 2016. The Chinese economy is now the world's second-largest and on track to overtake the United States as early as 2030.

 

What will China's economy look like once it reaches that point? What can we learn from China's experience? And how will China's development affect the United States and the world?

 

These questions are not just of academic interest; they have real policy implications for the United States and other countries. For example, if the U.S.-China trade deficit were to shrink or disappear as a consequence of China's economic development, then it would no longer be a political flashpoint. On the other hand, if China were to overtake the United States as a source of innovation or be seen as a threat by its neighbors or rivals, then the U.S.-China relationship could evolve in unpredictable ways that undermine American security and prosperity.

 

Economics Relationship Between China and US:

The United States and China will be the two largest economic powers in the world for the foreseeable future, but their economic relationship is more complicated than that simple fact suggests.

 

The two economies are more integrated and interdependent than they have been ever before, yet they also face more tensions than at any time since the normalization of diplomatic ties.

 

China has become a significant manufacturer of high-technology goods, and it is quickly becoming a global leader in technological development. China's rise as an industrial power has created a huge export market for U.S. technology companies and has driven down prices for electronic goods for consumers around the world.

 

Chinese investment in U.S. companies has grown rapidly over the past few years, and many of those investments have strengthened U.S. companies' competitiveness globally. The growth of China's middle class creates a potential consumer market of hundreds of millions of people for U.S. consumer goods and services, and Chinese students contribute billions of dollars to the U.S. economy annually through tuition payments to universities and colleges.

 

But growing competition from Chinese firms is hurting some American companies, particularly in manufacturing industries where wages are relatively low and profit margins are thin (the same can be said about rising competition from other developing countries).

 

Over the past three decades, China has become a global economic powerhouse capable of generating sustained high growth rates and massive consumer demand. The country's economic rise has been so striking that some analysts have predicted it could surpass the United States as the world's largest economy by 2030.

 

But even though China's share of global output is expected to grow, America will remain the world's largest economy for decades to come. According to projections from The Economist Intelligence Unit, China's share of gross domestic product (GDP) in purchasing power parity terms will rise from 14 percent in 2012 to 19 percent in 2030. Over the same period, America's share will fall from 23 percent to 21 percent.

 

The reason is simple: At its current level of development, China must sustain growth rates much higher than those of more advanced economies to keep its share of world GDP rising. China's per capita GDP — a measure of average living standards — was just $6,200 in 2012. That's less than one-seventh the U.S. level and just one-third of Mexico's. But at market exchange rates, China is already the world's second-largest economy and it remains one of the fastest-growing major economies.

 

Many experts are urging American business owners to begin preparing for the day when China becomes our largest trading partner. For example, Mark O'Keefe, Vice President at UBM Electronics, has written several articles on this topic. He says that it's vital for American companies to have a plan for competing in this new environment. Otherwise, their products will be priced out of the market by the foreign competition and their companies will go under.

 

From a long-term perspective, the rise of China should bring positive changes to the global world order. A second superpower will help stabilize the international political arena and make the world more multipolar and inclusive. Especially because China is not only economic power but also a military one. Although some may see it as a threat, this openness ultimately proves to be favorable for both China and for the rest of the world, since it gives other countries more chances to balance the existing hegemony.