China vs US: which has the world’s biggest economy?
Which country comes out on top? It’s an answer that varies… read on to break down exactly how both economies square up
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They are the two biggest economies in the world, and depending on who you ask – and what metric you use – the nation that comes out on top is contested. According to a Pew Research survey of 24 countries, only around one third surveyed see China as the world’s leading economic power, with the rest giving the title to the USA. However – especially in recent times – as both countries navigate turbulence amid an ever-changing geopolitical landscape, it becomes even more difficult to ascertain the ‘best’ economy.
According to the Bank of England, four key indicators show a country’s economic health. The first is GDP – a measure of all the goods and services produced in a country over a period – with an increase meaning the economy is growing. Second is inflation (the pace at which prices rise), with the UK Government stipulating any level above or below 2 per cent as suboptimal. Thirdly, unemployment: the fewer unemployed individuals the better. And finally, inequality – high inequality (in other words, how a country’s wealth is distributed) is a sign of an unhealthy economy.
All of these factors can also be combined with other measures, such as trade balance (where exports exceed imports), income inequality and indexes such as the Better Life Index (which uses wellbeing across topics and countries). In short, there’s a whole world of metrics and variables, and a big scope of subjectivity depending on which ones are chosen.
Here, we have compiled several areas of comparison between both the US and China’s economy. Read on to find out how the two pit against each other in these measures…
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The swirl of factors
In 2024, the US economy reached approximately $29.2 trillion USD, growth driven mainly by strong consumer spending as well as technology and services investments. For China, it’s economy reached $18.9 trillion USD, powered by manufacturing and export demand.
Looking at both economies through this lens, you might be eager to suggest the US comes out on top. But if you take growth into account, it’s China whose economy increased the most – expanding by 5 per cent in 2024 year-on-year – compared to a 2.8 per cent increase in America’s.
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However, it gets even more complex than that. The US has a higher per capita GDP – a country’s total GDP divided by its population – sitting at $86,000 USD. In comparison, China’s per-capita GDP is just $13,445 USD, highlighting the lower income level per person in the country. If one were to consider income inequality as a measure of economic success, then using these figures it may make more sense to attribute the ‘best’ economy to the US. However, as previously explained, taking just one metric and heading towards a conclusion is not necessarily the right approach.
In terms of employment, the US has a low unemployment rate of around 4 per cent, with China’s similarly low at around 5 per cent. For China, though, concerns remain over its youth unemployment rates since job creation in tech industries struggles to keep pace with the number of graduates in the country.
Inflation, the final factor which is typically considered as a measure of economic success, varies between the countries. In 2023, the US’s inflation dropped from 3.3 per cent to 2.3 per cent. In contrast, China experienced extremely low inflation, with declines in consumer prices reported in fresh fruit, transport and communication.
Trump’s influence
One major – and undeniable – factor influencing the American economy is Donald Trump’s return to the White House. High tariffs – imposed to countries including both China and Mexico – have been responded to with equally high tariffs to the US. For example, Trump’s administration has made a 20 per cent additional tariff on imports from China; responded to by the nation by amping up their duties on various US agricultural products including cotton, wheat and corn.
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This retaliation, experts have explained, is likely to hurt economies around the world, even though Trump is adamant his policies will ‘defend [the US’s] economic and national security’ and ‘benefit American workers, manufacturers, farmers, ranchers, entrepreneurs and businesses’.
‘The impact of imposing these tariffs will have the effect of depressing US economic growth [and] contributing to a higher rate of inflation,’ said executive vice-president of the Peterson Institute for International Economics, Marcus Noland.
As Trump’s presidency continues, any further tariffs imposed by his administration could have the potential to destabilise America’s economy.
Ageing populations
A major factor influencing China’s economic growth, particularly in the future, is that of its ageing population, exacerbated by lower birth rates and immigration flows. By 2040, an estimated 28 per cent of its population is expected to be over the age of 60, with an obvious impact of decreasing the proportion of working-age individuals. As the population ages, it’s expected that China’s per capita growth will decrease by ten per cent. In comparison, the US’s will drop by around 6 per cent due to ageing.
China has long considered measures to tackle this problem, such as financial incentives as well as raising retirement ages, but both solutions can be difficult and expensive to enact. In terms of immigration as a potential solution, China has been ‘steadfastly unwilling’ to utilise it as a means of filling the labour gap.
For the US, which has been historically more open to immigration, this problem may be lessened. However, as the Council on Foreign Relations explains, US public support for utilising immigration may only continue if this immigration comes from legal routes, rather than unrestricted migration.
The future
As is evident through the various comparisons of the US and China, deciding the strongest economy between the two is difficult and nuanced. What one expert may proclaim will wildly differ from that of another.
Against the backdrop of a geopolitically turbulent world, it remains to be seen if a conclusive answer can ever be given to the question of ‘the world’s best economy’ and if either country can truly be crowned number one.