Home > Uncategorized > China has hugely outgrown the U.S. under Trump

China has hugely outgrown the U.S. under Trump

from Dean Baker

This is one in the “whose is bigger?” category; which country has added the most to their GDP over the last three years. There is not any particular reason anyone should care about this, except that Donald Trump has made a big point of touting something about how no one says China will soon be the world’s largest economy anymore.

In fact, China’s economy surpassed the U.S. economy in 2015, using the purchasing power parity measure of GDP. This measure, in principle, uses a common set of prices for all goods and services for all countries’ output. Most economists consider it the best measure of the size of a country’s economy for most purposes.

China has continued to grow much faster the United States, meaning the gap between the economies is growing. China’s economy is currently more than 25 percent larger than the U.S. economy.

The graph below shows the growth in the two countries’ economies since 2016.

Book1 17334 image001

Source: International Monetary Fund.

As can be seen, China’s growth has been more than twice as large as the growth in the United States since Donald Trump came into the White House. In other words, we should put Donald Trump’s claim that his policies have somehow secured the United States’ status as the world’s leading economy alongside his copy of President Obama’s Kenyan birth certificate.

  1. November 29, 2019 at 8:55 pm

    That’s a good punch line! The best policy for all Trump’s lies is always ridicule.

  2. Craig
    November 29, 2019 at 9:37 pm

    Yes. The new slogan in response to Trump’s idiocy should be “Fake Reality!”

  3. Ikonoclast
    November 29, 2019 at 10:18 pm

    The best measure of production is real stuff not any measure in a monetary numeraire. We should look at real production. The USA is so insignificant in some of these figures that it is subsumed in NAFTA,

    World crude steel production % in 2017:

    China – 49.2%
    NAFTA – 6.8%

    World finished steel products 2017:

    China – 46.4%
    NAFTA – 8.9%

    World cement production gross 2018:

    China – 2370 million metric tons
    India – 290 million metric tons
    USA – 88.5 million metric tons
    Turkey – 84 million metric tons

    World export of computer devices:

    China: 40.5% of exported computer devices
    Mexico: 7.7%
    Netherlands: 7.5%
    United States: 7%

    World automobile production:

    China – 27,809,196 cars
    United States – 11,314,705
    Japan – 9,728,528

    Of course, production is not the only sign of capitalized power and military power. Consumption is in many ways a better sign. Those who can produce less (or nothing) but still consume more of what others produce, ipso facto demonstrate their power. Only power relations can explain expropriation even if it occurs under the aegis of the money and finance system. Power imbalance could be measured by the ratio of consumption to production. However, such systems are inherently unstable in the ling term. Power tends to shift, over time, to the place where the production happens. At least, that was the experience of industrialization. The experience under financialization has been a retention of power in finance centers even as they lose industrial and technical power. However, this retention is not complete. Power still leaks away over time to the centers of production. Witness the relative decline of Britain. This paragraph would be my thesis at least but I have not studied such matters in detail.

    In summary, the USA is complacent as its relative power declines and China is happy for it to remain so. China is building out (and up) to modernize. The USA is not even maintaining its legacy infrastructure properly. See the report card of US engineers on US infrastructure. The vast discrepancy in steel and concrete production (and use) tell us this. How many dollars the USA makes from (say) Facebook, Amazon and Google is a relatively unimportant phenomenon long term. The dollars (and their power) are relatively evanescent compared to real stuff (like national infrastructure). In any case, the US government gains little from corporations which pay little or no tax.

  4. Craig
    November 29, 2019 at 11:57 pm

    With the new monetary paradigm freeing us from the capabilities of export platforms, inflation and fear of unemployment we could rapidly re-industrialize in the most efficient and ecologically sane way possible and/or in the medium term begin to off planet production.

    The effects of a mega paradigm change are both immediate and vast.

    • Ikonoclast
      November 30, 2019 at 3:07 am

      That begs the question of exactly what new monetary paradigm? In addition, no monetary paradigm can fix all our economic problems. It is quite false to think that money and market decisions alone can order our economy ethically, efficiently or sustainably. Money, finance and market decisions are made on the fallacious and imperfect assigning of relative values in an non-objective and nominal monetary unit. More to the point, money rewards are made more in relation to power, guile and hierarchy status than in relation to the social or ecological value of outputs. Our economic decisions going forward must be made on scientific and ethical considerations. Money, if we continue to use it, would simply be used to enable implementation of the decisions taken.

      A truly evolved democratic socialist society would evolve beyond the need for money. An alternative would exist in terms of “permissions to consume”. The market as “distributed intelligence” could be replaced by socialized planning aided by data collection and AI. Such planning is far more feasible with modern computing systems provided we use real counts of real things, real goals measurable by scientifically objective criteria and manage the whole according democratic and socialist ethical principles. To fail to see this at this juncture in history is to be as blind as those at the end of the Ancien Régime who wanted to retain that system and lacked the imagination to consider any new system (or failed to see that a new system was overtaking them anyway.

      A number of current “virtues” must be inverted, if we are to survive as a species. Thrifty use of resources must replace greed and watse. Conspicuous frugality must replace conspicuous consumption. Encouragement of economic growth and over-consumption must replaced by a steady state, circular economy and sustainable consumption.

      • Craig
        November 30, 2019 at 4:57 am

        “That begs the question of exactly what new monetary paradigm?”

        The one that resolves all of the major and deepest macro-economic problems that all the heterodox economists agree NEED to be resolved and that I have enumerated here many times, and ends the current monopoly status monetary paradigm of Debt Only.

        Steve Keen includes in virtually every one of his videos these days a graph that shows that whenever the rate of increase of credit dips the economy goes into recession…and yet the level of private debt has become so high that it has become un-serviceable…..and yet the current monopoly paradigm remains untouched Hence we are stuck between the proverbial rock and a hard place. The new paradigm of Monetary Gifting intelligently and insightfully implemented breaks up the current monopoly one and resolves the economy’s major problems….if one actually looks at what its policies do….as opposed to merely intellectualizing about the problems and ignoring the policy solutions.

        Does a monopoly paradigm of Debt Only makes sense to you? Especially in view of now chronically unserviceable levels of Debt?

        “In addition, no monetary paradigm can fix all our economic problems.”

        Never said it would. Only the deepest and major ones.

        Money is such a facile and effective tool, and double entry bookkeeping is likewise such a good tool (although it may need some reform in certain areas and possibly even transcendence in certain instances). All of the blockchain, cryto-currency and even the AI “solutions” are just complexity rabbit holes and serve mainly to take our focus off the real problem of the monopolistic current monetary paradigm.

  5. Ikonoclast
    December 1, 2019 at 9:21 pm

    We tend to advocate what we understand. A person understands MMT and double-entry bookkeeping, he advocates MMT and double-entry bookkeeping. A person understands how to make money on the current “free” market, she advocates the current “free” market. A person understands management theory of a certain kind, he advocates management theory of a certain kind. A person understands ordoliberalism, she advocates ordoliberalism… and so on.

    Note, here “understand” means “knows the theory of” usually with little idea of how that theory would work in all the multivarious empirical situations it could encounter.

    • Craig
      December 1, 2019 at 11:31 pm

      Without recognizing the single aggregative/macro-economic point in the micro-economy, that is retail sale, and the significance of the monetary, financial and economic paradigm changing effects of a high percentage discount/rebate monetary policy implemented at that point….none of the current cutting edge theories and reforms have nearly the broad, “knock on” and transformational effects as the program I’ve been posting about here for years.

      And that’s the difference, no matter how much or how little one understands it, between a mere theory within the current paradigm and a pattern change.

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