The Chinese economy is ranked higher than that of the U.S based on Purchasing Power Parity (PPP) (Willige). The measure is used to adjust the GDP of countries for disparity in prices. China is behind the US with respect to foreign direct investment (Willige). The country trails the US nearly four times in terms of exports. However, this gap may be narrowed in the near past with China making substantial investment in training her citizens. China has the largest education system compared to the US, with increased quest for higher education among the youth (Willige). China also ranks higher in energy usage as compared to the United States, which is logical based on the disparity in population and geographic size.
Approaches to Capitalism
Capitalism refers to an economic system in which private enterprises and individuals own capital goods. In a capitalist economy, supply and demand determine the production of goods and services in a market economy. Both the United States and China use capitalism. While the U.S. economy uses democratic capitalism, the Chinese economy uses state capitalism. Democratic capitalism is based on the multilateral organization of a market economy that is governed by a democratic state. The pillars that define capitalism in the U.S. are fiscal responsibility, economic incentives, and a free moral and cultural system. The rule of law and democracy are important factors of economic growth in the economic structure of liberal capitalism (Milanovic). Chinese state capitalism assumes an active government role in controlling industries. Important sectors of the economy are tightly controlled by the state, and most assets are controlled by state-owned enterprises.
Impact of the Internet
The internet is rapidly transforming the way business is conducted across the globe. Due to this, it is imperative for policymakers and governments across the globe to embrace and recognize the opportunities that are presented by this transformational tool. The Internet has played a major role in the growth of both the Chinese and the U.S economies. Across the U.S and China, the Internet has led to strong economic growth rates. The two economies have used the Internet as a marketing tool to reach many consumers. With an increase in the communication reach and speed, new heights of business development and marketing have been achieved in the two economies. The internet has also significantly transformed the business model in the two economies, with many firms offering their products and services to customers located in different geographical regions.
Relationship between Economic Growth and Personal Freedom
Personal freedom is a vital factor in the economic growth of any country. China is a rising military giant with a fast-growing economy.
However, personal freedoms and norms have greatly been undermined in the country. China has been strategically positioned among the emerging powers of the 21st century by the competitive economic globalization. Contrary to China, the U.S has a strong economy and respect for personal freedom of its citizens.
Analysts contend that free countries like the U.S are richer than their counterparts like China that curtail the rights and freedoms of its citizens (Great Pacific Capital). Freedom is a catalyst for competition which drives economic growth. The U.S ranks much higher than China on economic freedom measures including the Index of Economic Freedom (Great Pacific Capital). Little control and regulations enable individuals to engage in economic activities freely.
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Great Pacific Capital. “The Leader: China and the Freedom Advantage.” Great Pacific Capital, 2012, http://greaterpacificcapital.com/china-and-the-freedom-advantage/. Accessed November 13, 2019.
Milanovic, Branko. “With the US and China, Two Types of Capitalism Are Competing With Each Other.” Promarket, 2019, https://promarket.org/with-the-us-and-china-two-types-of-capitalism-are-competing-with-each-other/. Accessed November 13, 2019.
Willige, Andrea. “The world’s top economy: the US vs China in five charts.” World Economic Forum, 2016, https://www.weforum.org/agenda/2016/12/the-world-s-top-economy-the-us-vs-china-in-five-charts/. Accessed November 13, 2019.