Compare and Contrast Essay on China and US Economics

Introduction

China 's economic growth and huge imbalances with the US has led to some myths regarding the nature of the relationship among the two powers that may impede some sound policymaking. There is also an increasingly global debate of China surpassing America economically within the next decade. This has been as a result of China becoming the largest US government foreign holder of securities indicating that the US is so much dependent on China in financing their budget deficit. However, the US has a huge economic advantages that are said to last for several generations. The perceptions and claims of China's economic strength underpin its presence from its boarder to Latin America and Subsaharan Africa. A look into the economic dimension of China shows that it is far poorer and smaller as compared to the US. However, China is a large and highly populated country and has a long way to go before it matches the economic weight sheer of the US.

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Although China's economy is said to have matured, Its GDP is seen to have slowed from 14.2% in the year 2007 to 6.7% in the year 2017. This growth is however projected to fall to 5.8% by the year 2022 according to a research done by the International Monetary Fund. The government of China has embraced the slow economic growth thus embracing a growth model which is dependent on fewer exports and investment which are fixed and a lot more on private consumption, innovation, and services that may accelerate the country's economic growth. (Morrison, 2018). Relocating to China will however not be a wise idea due to the economic slowdown that the country is witnessing. There is also some economic recession predictions that the country is said to undergo that will have some long term consequences in income falling and unemployment. Unemployment and falling income will affect the living condition of individuals where families may lack the ability to support education, healthcare, and stable housing. Unemployment may create a social instability such as crime and riots. The country will also experience increased poverty and the reduction of private investment. The effect of recession will also be reflected in lower wages where companies will try to reduce the costs by reducing and keeping the wages low.

It is believed that the economy of China is already bigger as compared to the US. The inside view of China is regarded as different. Thus China faces some obstacles at this development stage. The country might be rich as a country, but its people are poor. According to IMF, It is estimated that China will be the world's largest economy, meaning that the total output may be large than that of the US. However, China's population is regarded to be four times larger as compared to the US. This concludes that, despite China's overall economic size, it is regarded to be lower economic wise.

Demographic factor also plays a major role in limiting the economic growth and prosperity of China. This can be argued on the basis that the population is getting older. Assuming that the demographic trend continues, there will be 400 million elderly Chinese with few descendants to take care of them. CSIS reports that the greying kingdom of the 6:1 current ratio of working adults to dependents who are elderly, it is estimated that the middle of this century the ratio will be 1:6 respectively. This will be as a result of lack of government pension funding. The elderly are regarded as a major healthcare service consumer. The result will reflect on the country's savings where it will be then eroded. China's demographic crisis is predicted to have a huge burden on the economy and its labor force. This effect will lead to a few workers, and this means that the government will struggle to pay for an older growing population. Working-age population will have an impact on slowing consumer spending. Meeting the long term and health care needs of the growing elderly will however result in high health care cost. There is a challenge of paying for health care and since the health care system has experienced a huge increase in overall private expenditures and overall cost since the early 1980s during the shifting to a system that was market-oriented.

In the year 2006, China's expenditures of 80% on health care were funneled into the treatment of government official of 8.5 million. Statistic suggests that more than 73% of the hospitals in China have indicated reports of incidences between healthcare professionals and patients. The country is however concerned and worried about getting sick and old. As compared to other developed countries by the year 2040, China will suffer from Alzheimer's. (Huang, 2019).

Most medium-sized and small businesses are forced to engage in the informal or black market for funding where the interest rate is 20,30 and 40 %. The bank in China is equipped to fund loans to state-owned large businesses. The banking sector in this country is inefficient and has a bad reputation in making bad loans where a lot of these loans are not paid back. This is regarded as a communist intervention legacy in the industry where banks offered loans to government business regarding the fact that the country's free-market principles. The stock market of this country is dominated by state-owned enterprises. This means that in case a startup requires capital, they always have to turn to foreign investors. Job creation cradle of small business everywhere in China is said to be at a lending standstill.

China is said to have escaped the global 2008 financial crisis where it was helped by a state-directed spending campaign that later created a huge debt. China is said to be adding more credits at an increasing pace. However, financial experts are beginning to sound alarmed bells. Reports by the bank of international settlements reported that China's credit of new gap and its economic long term growth has continued to grow thus indicating financial crisis likelihood. Some of the problems are associated with rapid growth of shadow financings such as other non-traditional lending institutions and wealth management products that have been involved in prominent t frauds. (Gough, 2019). China is also experiencing another debt problem. The country has become a creditor nation through lending money to other countries in funding infrastructural development and bailing of a friendly government. However, there has emerged troubles of this debt where it has turned out to be political. A Chinese citizen is, however, becoming drained and is tired of seeing their tax being used to improve the livelihood of other people.

The war on pollution could have a future economic impact in China. In 2017, China forced northern cities to cut industrial output. Coal and traffic consumption in reducing breathable and small particle emissions of PM2.5 by 15 %. This included many industrial plants closure where it costed a job loss of 40,000 in Beijing region. However, Jincheng which experienced an emission rise and economy tank is also planning to shut half of the industrial plants in the region during the smog build up. While China achieves to make environmental improvements which are long term through the raising of standard, devising of new laws, forcing companies to adopt new production methods and taxing pollutants, this will hurt the economy because many its economy depends on polluting industries such as steel and coal. China's environmental problems are exacerbated by urban sprawl; an example is Beijing where there are more Cars than Houston. The city is also said to have the dirtiest air in the planet. Where since 2006, it has been regarded as the leading carbon dioxide emitter from the energy where it is emitting twice the amount as compared to America. Development of industries and economy will lead to more heavy air pollution in China. However, the degradation of the environment is seen to threaten the growth of China and thus exhaust public patience with the reform pace. Environmental pollution in China leads to health complications that include cardiovascular, cerebrovascular and respiratory diseases. This pollution is also linked to chronic and acute diseases proliferation. China's emission from export industries is worsening environmental pollution, and there is also concerned about the Smog and acid rain.

China is regarded to have accumulated a lot of problems. The problems include corruption, serious environmental pollution, high-income inequality and system of flawed social security. Moreover, healthcare and education resources are unfairly distributed, and property bubble is still a looming crisis. Politically, China has continued to be criticized as being more authoritarian and less democratic as human rights are not so much respected and the media is facing the problem of censorship. (Xi, 2018).

With all this future prediction that may affect the slowdown of China's economy it needs to rebalance its economy through shifting from export and public investment towards private and public consumption. However, in the short run, some of its savings require to be invested abroad in real assets and not just in US treasuries. Therefore, For China to be regarded as a world economic power, it requires a currency where foreign investors can invest in. While China has been involved in internationalizing its currency renminbi, it has done so little. Meanwhile, the dollar is still dependent on the US political relations where most of the largest world foreign reserve holding nations such as South Korea, Japan, Qatar, Kuwait, Saudi Arabia and UAE shelter under the military umbrella of the US.

Conclusion

For the US to compete successfully with China, there is a need for the US government to limit federal land's control in defending needs and preservation of cultural phenomena. This will be achieved by the interior department avoidance of resource management that may distort the economy, and these reduce prosperity. Therefore, the US government should sharply and immediately cut the deficit. Where the Congress should ignore deficit spending claims that indicate that it creates wealth and it forces the capital of a given nation towards a low return. However, As the country transition to becoming a world community full member, we have experienced the end of China rather than America' s exceptionalism. What helps China to make progress today may not be required to create a global productive integration in moving forward. China is regarded as the US greatest commercial partner, and therefore, there is a need for the US to encourage China's engagement through eschewing every trade barrier.

References

Morrison, W. (2018). China's Economic Rise: History, Trends, Challenges, and Implications for the UnitedStates .(p. 7). Congressional Research Service. Retrieved from https://fas.org/sgp/crs/row/RL33534.pdf

Huang, Y. (2019). The Sick Man of Asia. Retrieved from

https://www.foreignaffairs.com/articles/china/2011-11-01/sick-man-asia

Gough, N. (2019). As China's Economy Slows, a Look at What Could Happen. Retrieved from https://www.nytimes.com/2016/10/19/business/international/china-economy-slows-impact.html

Xi, S. (2018). The Future of China's Reform and Opening-Up. Retrieved from https://intpolicydigest.org/2018/12/17/the-future-of-china-s-reform-and-opening-up/