Core Insights - The gap between China's GDP and the US GDP has widened significantly, with China's GDP now at only 62% of the US GDP, down from 77% four years ago, despite China's higher economic growth rate of 5.4% compared to the US's 1.9% [3][10] Exchange Rate Impact - The appreciation of the US dollar due to aggressive interest rate hikes by the Federal Reserve has led to a depreciation of the Chinese yuan, affecting the GDP calculations when converted to USD [4][6] - For example, if an individual had 7 million yuan last year, it could be exchanged for 1 million USD at a rate of 7. This year, even with an increase to 7.2 million yuan, the exchange rate means the individual still only has 1 million USD, illustrating the impact of currency fluctuations on GDP figures [4] Inflation Discrepancies - The US is experiencing high inflation, with a rate of 2.9% in August 2024, leading to increased prices for goods, which inflates GDP figures [6] - In contrast, China is facing mild deflation, with prices for some goods decreasing, which results in lower GDP statistics despite actual economic growth [6] GDP Calculation Methods - The US employs a spending method for GDP calculation, including hypothetical rents for owner-occupied housing and inflated costs for services like healthcare and legal fees, which can artificially inflate GDP figures [6] - China uses a production method, which accounts for actual manufacturing costs and value added, leading to more accurate GDP representation [6] Quality of Life Considerations - Despite the higher GDP figures in the US, the average citizen faces significant debt and high living costs, while China shows stable GDP growth and improving welfare for its citizens [8] - The comparison highlights that GDP numbers alone do not reflect the true economic well-being of the population, suggesting that quality of life should be a key consideration in economic assessments [8][10] Historical Context - China's GDP has grown from only 11% of the US GDP in 2000 to 62% currently, indicating significant progress despite recent declines [10] - The sustainability of the US's inflated economic figures is questioned, while China's focus on manufacturing and domestic demand may lead to future economic leadership [10]

Core Insights - The economic gap between the US and China has widened, with US GDP reaching $14.93 trillion and China's at $9.19 trillion, a difference of $5.74 trillion [1] - The perception of China's economic slowdown may be misleading due to currency exchange rate fluctuations, as the depreciation of the RMB against the USD affects dollar-denominated GDP figures [3] - The US has experienced nominal GDP growth driven by inflation, while China's actual economic growth is significantly higher despite lower nominal GDP growth [5] Economic Performance Comparison - In the first half of 2025, the US core PCE price index increased by an annualized rate of 2.54%, contributing to nominal GDP growth, but real purchasing power has not improved correspondingly [3] - China's CPI rose only 0.5% year-on-year, while PPI was at -1.6%, indicating a stable economic environment with a real GDP growth rate of 5.3% [5] - The actual growth rate of China is more than double that of the US, with China achieving a 5.4% growth compared to the US's 2.0% in Q1 2025 [7] Industry Strength Comparison - China dominates in various industrial sectors, producing over 54% of the world's crude steel and 75% of lithium-ion batteries, while the US's industrial output is significantly lower [9] - The efficiency of China's industrial output is three times that of the US, producing double the industrial goods with only 65% of the GDP scale [9] - The potential for a reversal in economic dynamics exists, as the US may shift to a weaker dollar strategy, which could improve China's GDP figures when converted to USD [9][11] Long-term Economic Outlook - The competition between the US and China is fundamentally about real economic strength rather than mere numerical comparisons, with China benefiting from a complete industrial chain and a large domestic market [11] - The US faces structural issues with a high proportion of its economy being virtual, leading to concerns about the sustainability of its growth model [11] - Future advancements in technology, green transformation, and improvements in living standards will be crucial for determining the long-term winner in this economic rivalry [11]