China has just cut interest rates by 27 basis points as they react to the global slowdown. Consumers worldwide are keeping purses in their handbags and with China’s two largest trading partners, Japan and the United States in economic decline, China is indeed feeling the effect.
There has been a lot of talk about China’s meteoric rise and some economists have even gone so far as to predict that China would overtake the United States by around 2035 as the world’s largest economy. This is just not going to happen – it just assumes too much. Things do not stay the same as we are seeing and as a country grows so do the myriad of problems – social and economic – that take resources to solve.
I remember as a child watching television shows that portrayed flying cars in full production around the year 2000 – where are they? We are still building roads, widening lanes and filling pot holes and to my knowledge there are no plans on the horizon for “flying saucer type” lanes in the sky.
When looking at the size of the United States it’s best to compare it to other nations and their GDP (Gross Domestic Product) – source Wikipedia (2008 estimate). The largest five economies are listed below.
- United States -$14.334 trillion
- Japan – $4.381 trillion
- Germany – $3.32 trillion
- China – $3.28 trillion
- UK – $2.78 trillion
In other words the US economy is so large that you would need to add the economies of Japan, Germany, Great Britain and China together to get an economy the same size as the United States. In fact the total GDP of these countries is estimated to be $13.761 trillion – still less than the United States. That’s why the United States is so important to the health of the worldwide economy.