China and USA Significance on the Global Economy
com. cn, 2017). Gross Domestic Product (GDP) is a quantitative monetary means of measuring the total economic activity within an economy for a given period. As an indicator of the economic activities and healthy of the economy, GDP allows comparison of various economies in different countries with a significant relevance (Aguado and Martinez, 2012). The calculation of the real and nominal GDP considers the contribution of the consumer demands, government spending and investment while taking into consideration imports. Analysis of its strategic foreign policies indicates US does not intend to relinquish the position as the sole world power. The recent administration led by Trump presidency has been critical of the dangers posed by the Chinese economy as well as emerging economies due to the weak fiscal and monetary policies adopted by the USA governments.
Under the “Make America Great Again” motto Trump, seek to reduce trade deficits with other nations, reduce job loss by regulating illegal immigrants and renegotiate previous trade agreements such as NAFTA and TPP as they tend to increase USA trade deficits while allowing maximum benefits for the trade partners (Roberts, 2018). From a different point of view, Kafchinski (2018) reports that the divisive control of power in America has seen the assertive reforms watered down. More so, the two nations have unhealthy trade deficits. Despite being a global trendsetter in economics and other aspects of economy, America has suffered numerous setups as superpower (Roberts, 2018). Its democratic political ideology and capitalism philosophy has seen the country exposed to the negative impacts of free markets.
Negative impacts of the America capitalist economy system include: outsourcing of jobs to other nations, the 2008 global financial crisis which damaged public trust on the financial institutions, as well as lack of political support in administrative efforts to increase taxes on corporation and wealthy capitalist (Kafchinski, 2018). The USA demographics such as increased consumerism, reduced saving culture, payments in the Medicare, social security and military speeding has increased the national debt as well as increased foreign borrowing to $294 billion in 2018 (Egan, 2018). Also, the boom and bust cycles of its financial market affects the valuation of the dollar as the reference global currency. As highlighted by Bijian (2005), the inefficiencies of USA to meet the needs of the global economy offered the China the opportunity to grow its economical and geopolitical influence.
Unlike USA capitalism, China has embraced protectionist policies that require foreign companies to share intellectual properties as well employ Chinese workers as necessary conditions for permits to produce consumer goods and services for its population. However, the significant economic growth of China has led to unregulated environment pollution and public health safety concerns as well as sky rocketing of house prices due to the high migration in urban centers (Epstein et al. China holds$1. 17 trillion American treasuries making it is the second largest holder of the treasuries bills after the Federal Reserve and USA the highest debtor of China (Egan, 2018). As leading research and educational centers, China and USA have greatly contributed to the innovative and technology development in the global economy.
Technology advancement in energy, health, information system among other sectors have been adopted across the globe due to the financial stability provided to the talented researchers in these nations. The two nations contributed rapid globalization and creative economic development and completion across the world. As illustrated by Epstein et al. , 2008), both nations have been engaged in gigantic infrastructure and investment in the African continent and Latin American as part of their foreign influence role. This bilateral trade between European Union and China is slightly lower than that between European Union and United State of America (Roberts, 2018). The European Union (EU) trade bloc acts as the largest export market for Chinese and American products while China is the highest supplier of products to the European Union.
As the holder of the over 30% of the global reserve currencies, China export orientated economic strategy has generated significant influence over the operations of the European Union (Zhang, 2015). Chinese and European trade relations have seen trading of RMB in London exchanges, increased Chinese direct investment in credit crunch nations as well as provision of cheap means of production for goods and services for the European populations (García-Herrero et al. The American interventions during world helped develop the European region into a formidable economic and trading bloc. Interestingly with the growth and development of the Chinese economy, the economy model is slowly changing from export based to consumption economy. Latino and Africa As illustrated by Zhang (2015), the last 10 years has seen dwindling growth rates and economy stagnation in Europe markets as compared to emerging Latin, Asia and African nations.
China has developed strong Sino-African relationships as Africa, the second largest continent has the mineral that the China requires for its industries an investment. The vast natural resources available in most of the African countries and need for infrastructure development has dominated China and African bilateral cooperation with African countries (Constantinescu, Mattoo and Ruta, 2016). Moreover, China policy of non-interference with politics has helped it exploit growing markets that European and America power houses are reluctant to coordinate business due to socio-political differences (Bijian, 2005). 5Billion to $83. 3 Billion from 2003 to 2012. The high market potential of China has opened up economic potential of these nations. America has As illustrated by Narins (2016), the trade imbalances and dependence of the Chinese economy have helped China leverage and spread it influence on these nations.
The short lived trade war between Argentina and China saw China threatened to suspend the $1. America needs to accept the impact of emergence of BRICS, and other potential emerging economies as traditional trading partners in Europe and japan flatters. Despite their ideological difference and economical competition, the two nations need prosperity of each other as well as global economy wellbeing. The two nation’s immense control and influence is very useful in addressing global issues such as promotion of human rights and freedom, peaceful coexistence, climate change , addressing cybercrime and nuclear and proliferation among other issues affecting the globe. References Epstein, T. Christopher M. M. , Sullivan, M. P. , Vaughn, B. , & Coipuram, J. China Passes Japan to Become No. 2 Economy. [Online] Nytimes.
com. Available at: https://www. Tempest, M. ‘Forget Commonwealth, target US & China’, economist warns Brexit trade team. [online] euractiv. com. Available at: https://www. EU–China Economic Relations to 2025 Building a Common Future. A Joint Report by Bruegel, Chatham House, China Center for International Economic Exchanges and The Chinese University of Hong Kong. London: The Royal Institute of International Affair. Dées, S. and Saint-Guilhem, A. Trans-Pacific Trade Partners Are Moving On, Without the U. S. [online] Nytimes. com. Available at: https://www. Constantinescu, C. , Mattoo, A. and Ruta, M. Trade Developments in 2015. Documents. Available at: https://www. census. gov/foreign-trade/data/index. html [Accessed 7 Apr. Narins, T. Roberts, K. 6 Of Top 10 U. S. Imports Are Also Top 10 Exports. [online] Forbes.
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