American and Chinese Economies

American and Chinese Economies

Introduction

A comparison between economies across the globe continually plays a pivotal role in economic planning processes. As such, economic planners and many interested parties are increasingly exploring how American and Chinese economies compare and contrast. These economies have emerged as the largest in the world in both Purchasing Power Parity (PPP) and Nominal methodologies. While the Chinese economy historically is driven by state-owned companies, its counterpart is reliant on independent private investors. Therefore, exploring how American and Chinese economies differ or compare in terms of using global, ethical, political, physical, and societal indicators presents an opportunity to draw valid economic conclusions pertinent to economic planning.

Relationship to Capitalism and Democracy

            The political lens presents a chance to compare and contrast the sizes and growth rates of both economies in connection to capitalism and democracy. Kahn (2019) asserts that the Gross Domestic Product (GDP)growth rates of 2.3% and 6.9% annual changes make the U.S. and China developed countries, respectively. Notably, the United States (U.S.) growth rate depends on a political-economic system commonly described as democratic capitalism. It is characterized by the continued large size economy and a significant growth rate, which draws from the pillars of democratic capitalism including, fiscal responsibility, free-market incentives, and a moral-cultural scheme that fosters pluralism (Kahn, 2019). Conversely, the economic size and growth rate in China traditionally draws from authoritarian regimes that have continually stifled capitalism.  Nevertheless, it registered an economic shift to become an engine of the global economic growth in the twenty-first-century under the Communist Party system that slowly installed democratization and a capitalist system (Kahn, 2019). Primarily, both economies have managed significant economic growth rates through the installation of capitalism, which does not limit political freedom.

Internet Effect

            The two national economies also compare based on the present-day Internet revolution. Even though sharp differences emerge between America and China in terms of internet users, penetration, growth, connection speed, and distribution, the Internet effect is significantly standard. Internet-based systems have produced notable cost savings in many sectors of both economies (Kahn, 2019). Although at different rates, the cost savings have yielded faster productivity growth in these countries. Both nations have registered lower prices for consumers as a result of Internet connectivity, resulting in improved living standards.

Nonetheless, the potential of the Internet to increase productivity growth in a wide range of distinct, but jointly reinforcing ways tends to set China apart from America. The digital revolution effect in China centers on production. It has significantly decreased the cost of transactions required to manufacture goods (Kahn, 2019). Contrarily, the impact on the U.S. economy revolves around goods and services distribution networks (Kahn, 2019). For instance, it has increased the management efficiency of the leading supply chains in the economy. The supply chain players can now effectively communicate to improve the flow of goods and information across the chains (Kahn, 2019). Whether in manufacturing or distribution, the Internet has mostly enhanced competition among key players in both economies, broadening markets and making prices transparent.

Capitalism and Political Policies

Also, America and China differ in the way they define capitalism in relation to national political policies. America continually defines capitalism as an economic system that depends on the private ownership of its factors of production (Kahn, 2019). This definition has regularly informed its political policies that regulate a wide range of economic facets, including, but not limited to, private property ownership, wage labor, and accumulation of capital. The policies enacted strengthen the American capitalist society, whereby production means are privately owned and operated for profit (Kahn, 2019). As such, the systems render the U.S. not a purely capitalist society since they act as regulations governing economic measures, such as taxation and subsidization. On the other hand, the Communist Party of China maintains that capitalism is a retrogressive approach since it exposes an economy to unregulated competition, likely to disadvantage the ordinary citizen (Kahn, 2019). China, unlike its counterpart, therefore, enacts policies that strengthen the Communist Party’s control over factors of production irrespective of the co-existence of private investors with public and collective investments.

Economic Growth and Personal Freedom

The economies collectively acknowledge the relationship between economic growth and personal freedom. Miller and Kim (2015) assert that economic freedom plays a pivotal role in enhancing the economic growth of both nations and consequently creates more personal freedom. Both regard this freedom type as an essential element of personal empowerment and human dignity, which gets better with as significant economic growth. As such, in both countries, personal freedom is a form of economic freedom, hence, forming a proven formula to track economic progress. Policies that underscore greater personal freedom in these economies, therefore, remains critical in spurring economic growth.

Conclusion

Overall, American and Chinese economies either differ or compare based on a diverse range of global, ethical, political, physical, and societal indicators. This current research paper integrated various economic facets to provide lenses for evaluating how the economies are similar or different. The lenses employed include how the size and growth of the economies relate to capitalism and democracy, the impact of the Internet, how the nations define capitalism in relation to national political policies, and the relationship between economic growth and personal freedom within the countries. Through the lenses, the comparison ideally approves the U.S. and China as vital strategic economies that continually shape the global economy.

References

Kahn, H. (2019). World economic development: 1979 and beyond. Routledge.

Miller, T., & Kim, A. B. (2015). Economic freedom: Policies for lasting progress and prosperity. 2019 Index of Economic Freedom.