The United States and China lead the international scene these days, as they together contribute about 40% of the global economic output, and in light of the current commercial and political scene transformations, the race for performance between the two economies is highlighted as one of the most important files for observers, investors and decision makers.
Both economies face escalating challenges, while Donald Trump’s return fueling commercial differences and increasing protectionist policies, China is tending to enhance the stability of its growth by pumping strategic investments directed towards biological industrial sectors.
In a rapidly changing world, reading the economic scene between the two great powers remains crucial to understanding the future of global trade, investment, and economic policies during the next decade.
Al -Jazeera Net reviews in this report the basic differences between the Chinese economy based on manufacturing and the US economy based on consumption and services, taking into account the level of per capita income from GDP, the volume of external investment, the volume of consumer spending, employment, economic inflation and other indicators.
1- GDP
- In 2024, the American economy reached about $ 29.2 trillion, which reflects an annual growth rate of 2.8%. This growth was primarily driven by strong consumer spending, technology and services.
- On the other hand, the Chinese economy expanded by 5% in 2024, bringing its gross domestic product to about 134.9 trillion Chinese ($ 18.9 trillion).
- This means that China’s gross domestic product reached 64.73% of the United States GDP, and in another way the US GDP exceeds 35.27% on GDP China.
This is in terms of nominal value or current exchange rates only, but it is completely reflected in terms of purchasing power (the most realistic measurement of comparison of GDP in various countries recommended by the International Monetary Fund), as China tops the list of countries in terms of purchasing power since 2016.
China’s economy is 1.27 times the US economy on the basis of purchasing power, according to World Bank data.
According to the “World Economics” platform, the United States is no longer the main driver of global growth, as the exceptional economic growth of China over the past four decades has led to an average rate of 4 times the rate of the United States, to a fundamental change in the balance of power in the world.
2- The per capita GDP
The main distinction between the two economies lies in the per capita GDP, which reflects the distribution of income and economic productivity for each individual.
- In 2024, the per capita GDP in the United States amounted to 89,700 dollars, which confirms the powerful economy based on service and high wages in the United States.
- On the other hand, the per capita GDP in China reached 13,870 dollars, indicating a decrease in the individual income level despite the huge economic size of the country, according to USS.
This gap highlights the current structural shift in the Chinese economy as it turns from manufacturing that is led by export to the growth driven by local consumption. While China has made progress in increasing income levels, it is still late in the United States in the amount of family wealth and social services.
“China is seeking to stimulate the growth led by consumers instead of investing, but its success is limited so far … although China does not reduce the importance of its export activity, but the expansion of internal demand represents the biggest challenge it faces.”
3- Industry
- As of the last quarter of 2024, the manufacturing sector contributed about 9.9% in the GDP of the United States, or the equivalent of $ 2.94 trillion, and this indicates a slight decrease from the previous year, as it represented 10.3% of the gross domestic product in the corresponding quarter of 2023, according to the National Association of Manufacturers in America.
- On the other hand, the industrial sector in China contributed in 2024, including manufacturing, mining, construction and facilities, with about 36.5% of the country’s gross domestic product, and this highlights the pivotal role of this sector in the economic structure of China, especially when compared to the United States, according to the China Baving platform.
On the global level, the strength of China in the manufacturing sector is evident, in 2024, China contributed about 30% of the added value of global manufacturing industries, maintaining its position as the largest industrial power in the world for 15 consecutive years.
This contribution confirms the pivotal role of the sector in global supply chains, as it affects everything from consumer electronics to heavy machines, according to the previous source.
https://www.youtube.com/watch?v=kqiyzwc-cqi
4- Foreign direct investment
In 2024, the United States clung to its position as a leading destination for foreign direct investment, as sectors such as technology, financing and renewable energy attracted large foreign capital.
The strong American economic recovery has strengthened after the Korona (Kovid-19) and the increasing demand for safe investments, the United States dominating global financial flows, and the main initiatives in infrastructure, clean energy and semiconductor technology were attracted during the era of Joe Biden’s administration of large foreign direct investments, especially from allies such as Canada, Japan, South Korea and Britain.
- In the numbers, in 2024, the foreign direct investment in the United States witnessed a noticeable increase, and the initial data indicates incoming flows of about 398 billion dollars in the last quarter, according to the economic data alone of the Federal Reserve.
The volume of foreign direct investment reached 5.4 trillion dollars by the end of 2023, which confirms the position of the United States as a leading global investment destination.
At the same time, China has always been a major recipient of foreign direct investment, but it faced a slowdown in 2024, due to concerns about the inability to predict organizational regulations, the slowdown in the real estate sector, geopolitical tensions between the United States and China, and despite this, China is still one of the largest foreign direct investment recipients in the world, benefiting from its wide labor market, and the growth of the class Medium, expanding its advanced technological industries.
- With the numbers, the decline in foreign direct investment in China in 2024, and reached about 826.2 billion yuan (114.7 billion dollars), and this represents a decrease of 27.1% compared to 2023, recording one of the largest annual declines in modern history, according to the Chinese State Council.
5- Consumption
Consumer spending was a major engine of economic performance in both countries, as US retail sales maintained strong growth throughout 2024, and the American economy benefits from a model based on consumer.
- Personal consumption expenditures constitute approximately 70% of GDP, and despite high interest rates, the strong wage growth and low unemployment rate reinforced consumer confidence.
- From October to December 2024, consumers in the United States grew by 0.4%, 0.5% and 0.8%, respectively, according to the China Bignging platform, according to the USS data.
- In the last quarter of 2024, personal consumption expenses represented approximately 68% of GDP For the country, proper consumer activity is the main driver of economic growth according to USS.
- Debt is increasingly funded by consumer spending, by the end of 2024, the total debt of families in the United States reached a record level of $ 18.13 trillion, and this represents an increase of 3.6% over the size of debt in the previous year.
As for China:
- Retail sales increased by 3.5% in 2024, reaching 48.35 trillion yuan (about 6.8 trillion dollars). This continuous shift in China reflects a consumption -based economy.
However, the state of economic uncertainty has weakened consumer confidence, which limited the full potential for local spending. Despite these challenges, the Chinese government set an ambitious target for GDP growth of about 5% for 2025, confirming its commitment to stimulating consumption and ensuring economic stability, according to the China Briding platform.
https://www.youtube.com/watch?v=qyonvsoripa
6- Employment and unemployment
- The United States maintained a relatively low unemployment rate, about 4% in 2024, supported by the creation of job opportunities in the health care, technology and professional services sectors, and the labor market flexibility was a major motivation for economic expansion, according to the American Labor Office data.
- While the unemployment rate in the urban areas of China reached about 5%, which reflects relatively stability in employment, however, youth unemployment remained a growing concern, as job opportunities in advanced technological industries and urban industries face difficulty in keeping pace with the increasing number of graduates in these sectors according to the Chinese State Council.
7- inflation
Inflation trends between the two countries varied in 2024:
- The United States witnessed a decrease in price levels to 2.3% from 3.3% in 2023, indicating the success of the Federal Reserve policies aimed at controlling price growth.
- The low rate of inflation has contributed to maintaining the purchasing power of consumers and sustaining economic growth.
On the other hand:
- Inflation in China decreased sharply, the consumer price index increased by only 0.2% in 2024, and the sectors of fresh fruit, transport and communications witnessed the largest decrease in their prices as it decreased by 1.9%, and this is primarily due to the increase in the use of new energy -powered vehicles, according to Reuters.
It is clear that both the United States and China continue to form the features of the global economy through their fierce and continuous competition, and while the United States maintains a solid consumption force and a solid financial system, China seeks to enhance its position through industrial innovation and accelerate the pace of development.
Despite the challenges facing both countries, from slowing down to geopolitical tensions, the dynamics of competition between them creates deep opportunities and transformations that affect the entire global markets.
In a world that does not know stability, the giants’ struggle between America and China will remain a decisive factor in drawing the future of the global economy, and a major specified for the major trends in the fields of investment, innovation, and international trade.
