Economic Status of China and the United States

Economic Status of China and the United States

For the past one decade, the United States and China have been on an economic war, probably the former wanting to maintain its superpower status while the latter striving to topple the former in the same respect (Heshmati). The United States has been the world largest economy for close to one and half centuries since 1871 but China has been a major threat in the recent years (Zhang). As the United States experience economic turbulence including the 2008 economic recession, china has been on a rapid economic growth for the past one decade (Guo). Perhaps one would attribute this to the radical market reforms that China initiated in 1978 that has led to its achievement of an average of 10% economic growth (Estrin). Particularly, Chinese has been on the forefront of forming development partnerships with many African states leading to the awarding of various contracts to the Chinese companies by the African governments (Maddison). This paper examines the economic status of China and the United states in terms of growth and companies in addition to giving personal views on such aspects.

The United States is the biggest economic country in the world. And China is the second economic country. The United States is the biggest import business country, and China is the biggest export business country. The 70 % companies of the United States are corporations; however, there is more sole proprietorship than corporations in China. People do any kinds of business in China. The different between corporations of the United States and in China is: in China, there is not double taxon in corporation for business law. The MacDonald, KFC, Starbuck are the companies form the United States. However, there are more and more Maldonado, KFC and Starbuck in China. For the personal economic, the personal revenue of the United State citizens is better than Chinese. In the United State, every state has own minxum salary law. However, the Chinese government set the minim salary law several years ago, Also there are so many Chinese people need to have jobs to earn money, so that people do not follow the law that give employee minim salary.

Since China and the United States have unique foreign policies, particularly regarding business relations and partnerships, it is worth noting that both countries have experienced different economic growth patterns over the past half century (Naughton). Nonetheless, the beginning of the 21st century set new economic trends for china and the United States, with China taking an upwards trend. China has managed to pull its economy together to become the world’s second largest economy after the United States. This is highly commendable considering the high population of China currently stands at 1.3 billion people (Heshmati).

In terms of the Gross Domestic product (GDP), stands at approximately USD 8.25 trillion, at least according to the IMF estimation in 2012. The estimation was based on the market exchange rates and the current prices of commodities within the region (Lin). Surprisingly, the United States had a GDP that stood at double the digits posed by China in 2012, which was USD 16 trillion in the same year (Orhangazi). While the figures might appear to have a significant difference, economic analysts have predicted that China will close the gap in a few years’ time because of purchasing power parity between china and the U.S (Maddison).

The United States has some of the best multinational companies that have gained wide market across the globe. For instance, Ford, McDonalds, Apple Incorporated, and Starbucks are some of the renowned U.S. companied that have subsidiaries all over the world (Cai). Fundamentally, the essence of having companies all over the world is to enhance exportation and reduce the appetite for imported goods (Guo). Unfortunately, this has not been the case for United States, especially in the past five years (Northrup). Since most of the importations into the United States have their origin in Asia and china in particular, the U.S. has reviewed its foreign policies in order to protect her economy from further down fall (Lin).

As far as the Chinese companies are concerned, it is worth noting that China has been for a long time the world’s cheapest provider of cheap labor (Wong and Liu). However, China has been fighting this battle with India and Singapore, which are on the economic rise. While the United States has embarked on an aggressive market expansion of its products, China has turned its attention to Africa where it is undertaking various developmental projects (Maddison). It means that the United States will maximize revenue collection through exports while China will gain more revenue through contracts won in African countries (Fishback). From these two strategies, it is evident that China will have a head start in expanding its economy given that there are more opportunities for economic expansion in Africa (Bao, Lin, and Zhao).