China’s gross domestic product (GDP) grew 6.8% in the first quarter, which was more than expected. The National Bureau of Statistics said China’s services sector was a major contributor.
No one expects the United States economy to grow as quickly, but it remains mired in very modest 2.5% growth. The “China Miracle” continues to trump American economic progress. China continues to benefit from the rise of its own consumer class, a trend similar to the growth of the U.S. economy from the 1950s through late in the century.
China’s bureau management wrote:
In the first quarter, the total retail sales of consumer goods reached 9,027.5 billion yuan, a year-on-year rise of 9.8 percent, 0.1 percentage point faster than the first two months, and 0.2 percentage point slower than the same period last year. Analyzed by different areas, the retail sales in urban areas reached 7,709.6 billion yuan, up by 9.7 percent, and the retail sales in rural areas stood at 1,317.9 billion yuan, up by 10.7 percent.
Even with unemployment just above 4%, the U.S. economic growth has not taken hold. This may have to do partly with a lack of increase in personal income. Some may have to do with the number of Americans who have dropped out of the workforce and have stopped looking for work completely.
China’s growth is so rapid that more and more economists believe its GDP will be larger than America’s within as little as a decade. The U.S. number was $19 trillion last year, and China’s was $12 trillion. It is too early to tell what this will mean to the global economy. America became the engine of global growth after World War II.
Certainly, China’s growth means it will control more of certain large industries. China’s largest banks are bigger than those in the United States, but that may not make much difference to global clout. China’s banks operate heavily within its borders while large American banks are multinational. China already has a significant place in the global energy markets, led by PetroChina. Its e-commerce industry has started to expand overseas with Alibaba as the leader. Its telecom companies already have spread well beyond its borders. This will be followed by other widely purchased consumer goods like autos. China means to challenge the United States and major European Union economies as its exports to not only these countries but lesser developed ones as it continues to grow.
China’s economic advantage over the United States based on growth is unlikely to change. Its structure and that of America are too different.