Chinese GDP approaches US economy, proportion exceeding 70% in 2020
Data from the US Bureau of Economic Analysis showed on Thursday that the US' GDP declined 3.5 percent in 2020 on a yearly basis. The record decline is the first negative reading since the financial crisis in 2009 and the lowest since 1946.
Nearly every sector, except for the government and the housing market, contracted last year. Consumer spending, a major driver that accounts for more than two-thirds of the economy, tumbled by 3.9 percent, the worst performance since 1932.
The pandemic has depressed consumer spending and business investment, putting many Americans into unemployment and poverty.
Current-dollar GDP decreased 2.3 percent, or $500.6 billion, in 2020 to a level of $20.93 trillion, official data showed, still making the US the largest economy in the world. In 2019, the nominal GDP of the US recorded $21.43 trillion.
Based on the newly released figure, China's nominal GDP reaches 70.4 percent of that of the US, up from the 67 percent proportion in 2019.
As the first country emerging from the COVID-19 disruptions with effective prevention measures in place, China's GDP exceeded the 100 trillion yuan ($15.42 trillion) threshold in 2020, growing 2.3 percent year-on-year to 101.5986 trillion yuan last year. And it is the only major economy to post growth in the pandemic-ravaged year.
With strong prospects that the world's two largest economies will rebound robustly this year and that China could register a higher increase in its economic output, the GDP gap will further narrow and the proportion that China's GDP takes up in that of the US will remain above 70 percent, experts said.
The Chinese economy is expected to expand by 8.2 percent in 2021, according to the median of the 20 experts surveyed by the Global Times. The IMF projected the growth would be 8.1 percent.
China will overtake the US to become the world's largest economy by 2028, five years earlier than previously forecast, said a report released in December by the UK-based Centre for Economics and Business Research (CEBR).
It attributed this to China's "skillful" management of COVID-19, which will boost its relative growth compared to the US and Europe in coming years.
Tian Yun, vice director of the Beijing Economic Operation Association, said that the around 8 percent forecast is a conservative one. He estimated that in 2021, China's total economic output will increase by over 9 trillion yuan, beating the record high of 8.3 trillion yuan achieved in 2017.
"Foreign trade, which is estimated to hit double-digit growth this year, will contribute strong momentum for economic growth," Tian told the Global Times on Friday, adding that the US, as a major trading partner, will also see its trading relations further interwoven with China.
As Tian observed, the economic and trading interaction between the world's two powers seems to be returning to the scenario of several years ago, where the US government desperately prints money and divides it among American people, who will spend that money to buy Chinese-imported goods.
"Since the second half of last year, we can obviously detect that trend," Tian noted.
China's exports to the US grew by 7.9 percent year-on-year to $451.81 billion, while its imports from the US rallied 9.8 percent to $134.91 billion, according to data by the General Administration of Customs.
In growth terms, the US was a more thriving trade partner for China, despite it being the third-largest trading partner after the Association of Southeast Asian Nations (ASEAN) and the EU, in terms of total value.
Tian believed that both the Chinese and US governments seem to have some "tacit understanding" that they need to do their utmost to bring the economy back to normal and achieve stellar growth, and as a result, their economic relations will become more pragmatic.
"In particular, the new Biden administration badly needs to stabilize economic growth amid fighting COVID-19, which has taken over 400,000 lives in the country," said Tian.
Biden is continuing to chase a bipartisan deal over his $1.9 trillion stimulus package proposal to offset the virus.
With the virus still raging, economists forecast that the US GDP will slow to below a 2 percent rate in the first quarter. For the full year of 2021, it is expected to rally by 5.1 percent.
Deng Yu, a senior research fellow of the Atlantis Financial Research Institute, told the Global Times Friday that both countries' quick recovery would signal positively for the world's economy, although they have prioritized different paths.
"The US is more keen to solve its internal issues like the staggeringly mounting debt, inflation and unemployment, while China has turned its eyes on structural problems to achieve high-quality development as illustrated in the 14th Five Year Plan," Deng said.