As we delve into the status of the American economy heading into the latter part of 2024, the recent data reveals fascinating insights about the characteristics and resilience of its growthThe GDP growth rate for the United States in the third quarter stood at 2.8%. While slightly lower than the 3% observed in the previous quarter, this figure undeniably reflects a robust economic performance amidst global uncertaintiesThe ongoing question is: what are the underlying factors that allow the United States to sustain such vigorous growth, especially when the global economic landscape appears so turbulent?

A significant engine driving the American economy is personal consumptionReports indicate that personal consumption accounts for a staggering 70% of the total GDP in the U.SFor the third quarter, the increase in consumption was measured at a substantial 3.5%. This trend persists despite the pressures of high inflation and rising interest rates, demonstrating that American consumers maintain a strong desire and capacity to spend

Such resilience of the consumer market highlights a critical aspect: the American economy fundamentally relies on domestic demand.

In stark contrast, China's internal demand appears to be weakeningAlthough China continues to implement measures aimed at boosting internal circulation of its economy, the confidence and purchasing power of its consumers have not fully recoveredThis translates into a slowdown in the growth rate for the Chinese economyAs the United States benefits from a significant consumer market and a globally dominant monetary policy, it has successfully maintained a stable growth trajectory.

Looking at the historical context, the upward trajectory of the American economy is not merely coincidenceSince 1979, the U.Seconomy has exhibited steady growth every decadeRemarkably, between 1979 and 1989, the GDP soared by 114%, and from 1989 to 1999, there was an additional increase of 71%. Although the rate of growth has moderated in subsequent decades, a constant rate of economic expansion has been maintained.

Particularly noteworthy is the ongoing expansion of the U.S

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GDP on the global stage from 2019 to 2029. The growth may have been less pronounced, yet it has never ceased, even in the wake of the COVID-19 pandemicFrom 2020 to 2023, the GDP has seen a staggering increase of 28%, likely unmatched by any other global economy during this timeframe.

Forecasts for 2024 predict the American GDP will reach approximately $29 trillion, indicating an annual increase of about $1.6 trillion – a figure equivalent to the entire GDP of South KoreaSuch growth is still an exceptional occurrence worldwide.

Despite the growth witnessed in China's economy in recent years, the pace of GDP growth when measured in U.Sdollars has falteredIn 2021, China's GDP exceeded $17.8 trillion, but growth has effectively stagnated since thenBy 2023, the GDP barely inched up to $17.79 trillion, widening the gap between the United States and ChinaProjections suggest that by 2024, the GDP of the United States is set to greatly surpass that of China, reaching nearly $29 trillion, marking one of the most significant disparities in history.

Currently, China's GDP constitutes just 63.3% of the U.S

figure, reflecting a significant drop from 75.5% in 2021. At one time, during China’s peak economic development phases, growth rates were close to those of the United StatesPresently, however, the target of “catching up to the U.S.” seems increasingly elusive as the American economy showcases rapid recovery.

China's economic struggles are exacerbated by deflation and currency depreciation, which compound the challenges facing its economyIn 2023, it experienced a 0.8% deflation rate, showcasing a stark discrepancy between nominal GDP growth and actual growthThis circumstance not only mirrors dwindling market demand but further diminishes consumer confidence, leading to a critical question: how can China address the inadequacies of internal demand?

A lack of internal demand has directly contributed to diminished consumer spending, overproduction by businesses, and a significant weakening of the internal growth drivers

Concurrently, the continuous depreciation of the Chinese yuan has resulted in poor performance when the GDP is evaluated in U.SdollarsThe strong dollar, amid the increased pressure on the yuan, has created added challenges for China's export-reliant economic framework, especially as it still heavily depends on the U.Smarket.

Historically, China's economy has relied on external demand, specifically through its exports to the U.SWith growing uncertainties in the global economy, including rising interest rates in the U.S., export growth has begun to stagnateIn response, China has introduced multiple measures aimed at stimulating the economy, including heightened investments in infrastructure and initiatives supporting domestic demandHowever, the efficacy of these measures in truly reviving consumer demand remains questionable.

Activating internal demand and promoting consumption are central to China's economic transformation challenge

This task, however, is far from straightforwardProlonged deflation, coupled with an unpredictable external environment, significantly hampers the replenishment of consumer confidenceGenuine reforms and structural adjustments are essential in reversing the trend of sluggish economic growth.

The American economic model offers lessons for China, particularly in navigating the current obstaclesIn recent decades, notably through the post-pandemic recovery phase, the U.Shas demonstrated remarkable adaptability and resilienceIts consumption-driven economic model and flexible monetary policy have empowered it to address various challenges while maintaining steady growthConversely, China's economic bottleneck arises from its long-standing reliance on exports and manufacturing, and its insufficient transition towards a consumption-centric economy.

For China, unlocking internal demand and fostering consumer spending are crucial factors in sustaining long-term economic growth