In just a few decades, the gap between China's economic total and that of the United States has been narrowing continuously, with China's GDP reaching up to 80% of the US at its peak, seemingly catching up.
However, in the past two years, the gap between China and the US has been widening.
What's going on?
Both China and the US have released their GDP data for the first quarter of 2024: In the first quarter of this year, China's GDP reached 29.62 trillion yuan, equivalent to 4.17 trillion US dollars, while the US GDP for the first quarter reached 7 trillion US dollars, thus China's GDP fell to 59% of the US.
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In 2021, China's GDP reached 77% of the US, and in 2022, this proportion fell to 70%, and in 2023, it fell to 65%.
This year, in the first quarter, the fall was even more severe, directly dropping below 60%, with the gap between China and the US continuously widening.
There has been a persistent notion circulating online known as the "70% curse," which posits that when a country's GDP approaches or reaches 70% of the US, it will be met with continuous suppression from the US, leading to a decline in GDP.
This theory even provides examples, such as the former Soviet Union and Japan, both of which once reached 70% of the US in terms of economic total, but ultimately one dissolved, and the other was caught in the "Plaza Accord" orchestrated by the US, which burst the economic bubble and led to 30 years of sluggish growth.
Even the US media has spoken up, suggesting that under such a trend, China's GDP may not catch up with the US.
So, what is the reason behind the continuous widening gap in GDP between China and the US over the past two years?
If we look solely at the GDP figures, the main influencing factor is the exchange rate.
It can be observed that before 2021, the gap between China and the US was still narrowing, but starting in 2022, the gap suddenly widened because the US announced an interest rate hike in 2022, causing the US dollar index to rise sharply and the yuan to depreciate.
From 6.3 to 7.2, the depreciation of the yuan is the main reason for the widening gap between China and the US.
Calculated in yuan, China's GDP has been steadily growing, and the GDP has not decreased, but due to the devaluation of the exchange rate, the gap has widened when converted to US dollars.
In 2023, China's GDP was 126 trillion yuan, with an average annual exchange rate of 7.04, so China's GDP was 17.89 trillion US dollars, while the US GDP was 27.35 trillion US dollars, with China's GDP reaching 65% of the US.
If the yuan appreciates to 5:1 against the US dollar, then China's GDP would instantly become 25.2 trillion US dollars, reaching 92% of the US, which is the power of the exchange rate.
Therefore, this numerical gap is not worth serious study.
In fact, looking at the GDP growth rate can explain all the issues.
In the first quarter of this year, China's GDP grew by 5.3% year-on-year, while the US GDP grew by 2.9% year-on-year, indicating that China's actual economic growth level is higher than that of the US.
From the perspective of industrial development, China has been in the painful period of industrial transformation and upgrading.
The previous labor-intensive development model has driven sustained economic growth, but this model is no longer sustainable, so industrial upgrading has become an inevitable path.
Industrial upgrading means moving towards high-end manufacturing, high-tech, and high-profit industries, and no longer just the "low-end factories" of the past.
However, the US wants us to continue being "low-end factories," continuously providing low-priced goods to the US, posing no threat and also reducing the US's inflation level.
However, the US hegemony is built on the foundation of high technology.
When we upgrade our industries, the US becomes panicked, especially when China's 5G technology achieves a lead over the US, causing great anxiety in the US.
As a result, the US desperately looks for various reasons and excuses to suppress and sanction Huawei.
The US believes that the dollar hegemony controlling the world is the main way for American capital to profit, and using communication technology to monitor allies is an important means.
Once communication technology is mastered by other countries, how can they monitor, control, and squeeze allies in the future?
Our new energy vehicle transformation has been very successful, and the export volume of cars has already ranked first in the world.
The US is panicked again, rushing over to say that our new energy industry is overcapacity, and then immediately preparing to increase automobile import tariffs.
The US is now full of two words: sanctions and suppression.
From trade wars, technology wars, to currency wars and financial wars, the US's suppression and sanctions have never stopped, but our industrial upgrading has never stopped either.
The export of new energy vehicles, photovoltaics, and lithium batteries continues to soar, becoming an important driving force for China's exports, and the automotive industry is accelerating transformation and upgrading.
The US's GDP has surged in the past two years, which is the digital wealth obtained in exchange for continuous interest rate hikes and high inflation, continuously attracting global capital backflow.
However, it has also led to the continuous expansion of US debt and the constant erosion of a 5% high interest rate.
Before interest rates are lowered, the US will inevitably take all measures to blow up the world's major economies to pay for this wave of dollar tides and continue to maintain the global operation of the dollar hegemony.
Therefore, the second half of the great power game has not ended yet.
Only when the US lowers interest rates can we say that it has temporarily come to an end.
Before that, we should be prepared and ready for defense.