China and the United States are the two largest economies in the world. The combined GDP of the two countries accounts for more than 40% of the world's share. They directly affect the global economy and are the two economies that everyone pays most attention to. China's economic growth this year will definitely exceed that of the United States. However, due to the exchange rate appreciation caused by the US's massive inflation and seven rounds of interest rate hikes, the GDP gap between China and the United States will widen to about US$7 trillion this year. This has also become the reason why many people advocate that China cannot surpass the United States.
In fact, relying on raising interest rates to increase exchange rates, and inflation to increase GDP is a very terrible thing, and the sequelae will take a long time to heal.
We all know that after Japan’s Plaza Accord, it was believed that the controlled exchange rate would appreciate significantly, which greatly increased Japan’s GDP. In the 1990s, Japan’s GDP once reached more than 70% of the United States and more than 17% of the world. However, the subsequent economic recession lasted for a full 27 years, and Japan’s GDP this year has not yet returned to the level of 1995.
Although the rate of interest rate hikes in the United States is fast and urgent, it is still far from the rate at which Japan raised its exchange rate. But the side effects on the economy are also huge. It will affect the United States for at least two years, and these two years are an important period of opportunity for our country to catch up.
According to OECD predictions, my country's GDP growth rate will reach 4.6% in 2023, while the US economy growth rate will reach 0.5%, which means that my country's economic growth rate is 9.1 times that of the United States. In 2024, my country's economic growth rate is 4.1%, while the U.S. economic growth rate is 1%. my country's economic growth rate is 4.1 times that of the United States.
The economic growth rate of the United States in the past two years has been significantly lower than the normal level of the United States. In the 21st year of this century, the average economic growth rate of the United States was 1.91%. This shows how much of a negative impact the interest rate hike in 2022 will have on the U.S. economy.
The economic growth gap between China and the United States is widening, which will obviously lead to my country's GDP catching up with the United States at an accelerated pace.
If we follow the OECD forecast. We can roughly predict the size of my country's GDP by 2024.
I did the math and found that since 2021, my country's average price deflator has been 3.79%. Due to global inflation, the price deflator in 2023 and 2024 should be higher than the average, such as reaching 4.47% in 2021. This is despite the impact of the epidemic and the economic order has not been fully restored.
So let’s calculate it at 4% for two years. In this way, my country's nominal GDP growth rate in 2023 will be 8.6%, and the nominal GDP growth rate in 2024 will be 8.1%. This year, my country's nominal GDP is about 121.79 trillion yuan. After calculation, my country's GDP in 2024 will be about 142.98 trillion yuan.
This year, the exchange rate has depreciated due to the U.S. interest rate hike, but in the context of the U.S. not cutting interest rates, the exchange rate has rebounded sharply to 6.89. The U.S. will definitely be in an interest rate cut cycle in 2024, so we can judge that the average exchange rate in 2024 should be higher than in 2021.
The average exchange rate in 2021 is 6.45. If it appreciates slightly to 6.4 in 2024, then my country's GDP will reach 22.34 trillion US dollars in 2024.
The US dollar is the local currency of the United States, so there is no exchange rate issue involved. When the actual GDP growth rate is determined, the only thing that affects U.S. GDP is inflation.
We all know that the United States raises interest rates to curb inflation. This year's seven rounds of interest rate hikes have significantly reduced inflation. According to the United States' goal, it is to reduce inflation to 2%. A sharp slowdown in economic growth will further curb inflation. Therefore, the price deflator in the United States will not be too high in the next two years.
In 2001, the U.S. economic growth rate was 0.95%, and the GDP reached 10.58 trillion U.S. dollars. In 2000, the U.S. GDP was 10.25 trillion U.S. dollars, the nominal GDP growth rate was 3.22%, and the price deflator was 2.27%. We take global inflation into account and calculate it at 3%.
The nominal GDP growth rate of the United States in 2023 is about 3.05%, and the nominal GDP growth rate in 2024 is about 4%. This year, the U.S. GDP is about 25.04 trillion U.S. dollars. Based on this calculation, the U.S. GDP in 2024 is about 26.95 trillion U.S. dollars.
Based on this calculation, my country's GDP will reach 82.89% of that of the United States in 2024. Even taking into account other changes, there is no doubt that it will reach 80% of that of the United States in 2024.
