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StudentA

Student B
Mr. Soeldner
Individuals and societies
24 March 2017

Compare and contrast


two economical
countries
United States of
America and
China

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Table of Contents
1. Introduction to the Compare and Contrast Report
2. An economic overview of the U.S.A
2.1 What elements of a free market or command economy has the U.S.A implemented?
2.2 How does the American government deal with key economic questions?
2.3 Key economic components of the U.S.A
2.4 Main export and import countries and products
2.5 Income inequality
2.6 Taxation system in the United States
2.7 How does large debt effect the economy?
3. An economic overview of China
3.1 What elements of a free market or command economy has China implemented
3.2 How does the Chinese government deal with key economic questions?
3.3 Key economic components of China
4. Compare and contrast
4.1 Similarities and differences
4.2 Total exports GDP comparison
4.3 Population growth between the two nations
4.4 Human development between the two nations
4.5 Income inequality between the United States and China
4.6 China and the United States in numbers
5. Which system is better?
6. Works Cited

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Introduction
1. By Student A
This purpose of this report is to compare and contrast the two economic systems (The
U.S.A and China). This report will cover how societies, governments, business, households
and individuals allocate their scarce resources, as well as how the government deals with
key economic questions.

2. An economic overview of the United States of America

The USA, formally known as the United States of America,


is a constitutional federal republic composed of 50
states. With an area of 9.8 million km2, it ranks as the
third largest country by total area. With a population
of 320 million people, it is surrounded by its
neighboring countries: Canada, Mexico and Alaska.
The U.S follows a mixed economy, having the largest
economy in the world, representing 20% of the total
global output. The United states is also the second largest
in purchasing power parity (compares different countries'
currencies through a market). The economy in the United States is
widely dominated by services-orientated companies such as technology, financial
services, healthcare and retail. The services sector is the main engine of the U.S economy,
but it also has an important manufacturing base, representing 15% of output. The U.S is
the second largest manufacturer in the world and ranks first in higher-value industries.

2.1 What elements of a free market or command economy has the U.S.A
implemented?

A free market is an economic system in which the government does not interfere with
business in anyway. The prices for goods and services are determined by the demand of
product and consumers. A command economy is an economic system in which the
government determines the goods and services which are being produced, the quantity
of the goods and services and the price which is offered for sale.

The U.S follows a mixed economy, where the government controls many goods and
services, for example education, roads, hospital and utilities. A mixed economy, is most
commonly referred to as a " free enterprise system ". The American free enterprise system
emphasizes private ownership. Private businesses produce most goods and services,
almost two-thirds of the nations total economic output goes to individuals for personal
use, the remaining one-third is bought by the government and business.

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2.2 How does the American government deal with key economic questions?

The U.S is a mixed economy, the government partially intervenes with the system, by
controlling goods and services such as, education, courts, roads, hospital care and postal
delivery. The government also provides money for agricultural producers, oil companies,
financial companies and utilities. Most forms of economic exchange and nearly every
type of business is affected by the government in the U.S. Private business are required
to register with government agencies and can only operate with licenses approved by
the government. Some of these businesses include auctioneers, funeral attendants,
private investigators, makeup artists, hairstylists, real estate agents and financial advisers.

2.3 Key components of the U.S.A that make up their GDP

The four components that make up the gross domestic product (GDP) are personal
consumption, business investment, government spending and total exports. The gross
domestic product is the total economic output yearly, which is equivalent to what is being
spent in the economy.

Components that make up the GDP


Agriculture 1.1%
Industry 19.4%
Services 79.5%
GDP 16.77 trillion USD (2013)
GDP per capita 53,750 PPP dollars (2014) 11/185 ranking
GNI per capita (USD) 53,960
Population 318.9 million (2014)
Years of schooling (Primary to tertiary) 17 years of schooling
HDI 0.915
Unemployment rate 4.7% (2016 est.)
Life expectancy 80 years
Household income $50,000 (2010 statistics)
Ethnic groups white 79.96%, black 12.85%, Asian 4.43%,
Amerindian and Alaska native 0.97%,
native Hawaiian and other Pacific islander
0.18%, two or more races 1.61% (July 2007
estimate)
Adult Literacy levels (to what level) 86% can read, 21% of adults in the U.S.
read below a 5th grade level
Export (partners) Canada 18.6%, Mexico 15.7%, China 7.7%,
Japan 4.2% (2015)

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Important (partners) China 21.5%, Canada 13.2%, Mexico 13.2%,
Japan 5.9%, Germany 5.5% (2015)
Unemployment rate 4.8% (2017)
Government constitutional federal republic
Neighbouring countries The CanadaUnited States border to the
north of the Contiguous United States
and to the east of Alaska. The Mexico
United States border to the south.
Debt $17.91 trillion (31 March 2016 est.)

2.4 Main export destinations and products

U.S. Export destinations


The United states is the worlds third-
Canada largest exporter after China and the
European Union. The top five export
Mexico
17% destinations are as follows: Canada,
China 13% Mexico, China, Japan and Germany. The
52%
9% U.S is the 2nd largest exporter in the world,
Japan
4% exporting $1.45T in 2014. The exports of
Germany 5% the United states have increased at an
annual rate of 8.5% in the last five years,
Other export
destinations
from $967B in 2009 to $1.45T in 2014. The
most recent exports are refined petroleum
[Figure 1, Ticha Netfang] which represents 7.11% of the total exports
of the U.S.A, followed by cars which
U.S. TOP 5 EXPORT DESTINATIONS represent 4.18% of the U.S.A total exports.
13% of exported goods are consumer
300
AMOUNT OF MONEY MADE FOR
EXPORTING GOODS (BILLIONS)

241 goods (pharmaceuticals, cell phones, gem


250 diamonds etc.) which have an export value
194
200 of $194 billion. One third of the exported
134 goods are capital goods.
150
100 67.5 61.6 The top five export destinations from the
50 United States are Canada ($241B) followed
0 by Mexico ($194B), China ($134B), Japan
Canada Mexico China Japan Germany ($67.5B) and Germany ($61.6B).
EXPORT DESTINATIONS
[Figure 2, Ticha Netfang]

PAGE 5


Main import destinations and products

The U.S is the largest importer in the world,


U.S. IMPORT DESTINATIONS importing $2.16T in 2015. The United
States have increased yearly at a rate of
China
3.1%. In 2010 exporting $1.8T increasing to
Canada $2.16T in 2015. The most recent exports
20%
include computers which account for 4.2%
40% Mexico
15%
of total imports of the United States,
Japan followed by cars (7.8%) having an import
6% 6% 13% value of $169B, Crude petroleum (5.6%)
Germany
with an import value of $120B , packed
Other import medicaments (3%) ect. More than 80% of
destination imported items are goods. Capital goods
[Figure 3, Ticha Netfang] make up for more than one fourth of all
imports. The remaining quarter is made up
of consumer goods.
U.S. TOP 5 IMPORT DESTINATIONS
500 432
The top five import origins of the United
450 states are China ($432B) followed by,
AMOUNT OF MONEY ON IMPORTING

400
Canada ($331B), Mexico ($291B), Japan
331 ($128B) and Germany ($121B).
350 291
GOODS (BILLIONS)

300
The United States imports more than it
250
exports, resulting in a trade deficit of $502
200
128
billion, importing $2.712 trillion and
121
150 exporting $2.209 trillion. The trade deficit is
100 higher than it was in 2013 due to the dollar
50 strengthening by 25% in 2014 and 2015.
0 Though the United States exports billions
China Canada Mexico Japan Germany in oil and consumer goods, they still import
DESTINATIONS
more than they export.
[Figure 4, Ticha Netfang]

PAGE 6


2.5 Income inequality

UNITED STATES AVERAGE INCOME (2014)

$6,087,113

$1,260,508

$448,489
$33,068 $295,845

Bottom 90% Top 10% Top 5% Top 1% Top 0.5%

[Figure 5, Ticha Netfang]

Profit, rent, shares of stock, interest on saving accounts, salaries and wages are streams
of revenue that make up income. When income is distributed in an uneven manner
among the total population, it is referred to as income inequality. The income inequality,
the gap between the rich and the poor in the United States has been growing markedly.

On the graph shown above, the top 10% of


average income earners in the Untied States earn
roughly nine times as much as the bottom 90%
which is the majority of the population. Americas
1% earn thirty-eight times more than the bottom
90%. There is a noticeable gap in average income
between the bottom 90% and the top 10%, the U.S
tax system is supposed to help the growing
income inequality in the United States between
the havesand have nots. The rising
inequality has its roots in politics (The great
recession 2008).

De Navas-Walt, Proctor, and Smith (2010).


The Lorenz Curve for the United States, 2009

PAGE 7


2.6 Taxation system United States

The taxation system in the United States is progressive. The percentage of income an
individual pays in taxes increases within the increasing income. Those with higher
incomes pay more taxes and also pay a higher rate. The mandatory spending that the
government spends, consist of five categories: A third of mandatory spending goes to
Medicare and health, half of the mandatory spending goes to Social security, the
remaining is spent on unemployment and labor, food and agriculture, veterans benefits
and transportation.

2.7 How does large debt effect the Economy?

The current debt in the United States is $19.9 trillion. The debt in the United States is the
sum of all money owed by the federal government. One-third of the debt is
intragovernmental debt, the remaining two-thirds is debt held by the public. The
government owes this to buyers of the United States which includes companies,
individuals and foreign governments. Deficit spending drives economic growth. The
economy and voters benefit from deficit spending. The federal government spends
money on equipment, health care and construction. Private firms then hire new
employees, creating jobs.

2.8 Conclusion

Discussing the economic overview of the united states, as well as the elements the nation
as implemented in terms of the free market or command economy, how the government
deals with key economic questions, key components that make up their GDP, main export
and import products and countries, income inequality, taxation system and how the large
debt in the United States effects the economy will help determine which system is better
between the two nations (The united states vs China), the similarities and differences as
well as which system is more successful will be discussed further in this report.

PAGE 8


Introduction
By Student B

3. An Economic overview of China

China, also known as the People's Republic of China (PRC) is one of the world's biggest
countries, with an area of 9.597millionkm and 1.357billion citizens
(2013 est.). It's capital is Beijing and is the second biggest city
after Shanghai with 21.5 million citizens (Mar 2016 est.). It's
located in East Asia (Figure 1) and has 16 neighbouring
countries by land: Russia, India, Vietnam, Pakistan, North
Korea, Mongolia, Kazakhstan, Myanmar, Afghanistan,
Nepal, Laos, Kyrgyzstan, Bhutan and Tajikistan. Two of
them, Hong Kong and Macau are under Chinas control.
Neighbouring countries by sea include Brunei,
Indonesia, Japan, South Korea, Malaysia, Philippines
and Taiwan. Chinas official language is standard
Chinese, but various other regional languages and dialect
are recognised. These include Mandarin, Shanghainese,
Xiang, and Tibetan. China's "socialist market economy" (Insead
Knowledge) is now the second largest in the world, with a nominal
GDP over $10 trillion" (CSIS) and the world's largest economy by purchasing power parity
according to IMF. The GDP growth is one of the fastest expansion ever known and resulted
with lifting more than 800 million people out of poverty. According to The World Bank "China
reached all the Millennium Development Goals (MDGs) by 2015" and greatly contributed to
achieving MDGs globally. The rapid economic growth caused a few challenges as well. This
includes external imbalances, rapid urbanisation and confrontations to environmental
sustainability. Aging population and migration of labour are a few other challenges China has
to face. But no matter how much change China's economy has gone through, it remains to
be a developing country, though it "recently became the second largest economy" (The
World Bank).

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3.1 What elements of a free market or command economy has China implemented

China s Communist party has been using socialist market economy (Insead
Knowledge) to describe their economic system since the 1980s and the change that
occurred during this time caused a rapid social and economic development. In 1978,
China's communist government started to establish capitalist market reforms, which
resulted in companies turning away from state-owned enterprises in later years. In 1978
state-owned enterprises were responsible for nearly 80% of all Chinese industrial output
according to the Investopedia, while in 2013 it decreased to only 45%. This massive
decrease just proves the enormous change China has gone through and caused China
to catapult to one of the largest economies in the world.
There are few similarities to mixed economies, seen in the western countries with basic
differences. The main distinction lies less in the implementation of the mixed economic
model but rather in the degree of state-ownership and underlying authoritarian political
philosophy (South China Morning Post).

Over the past few decades Chinas economy has multiplied by nearly 50 times and
resulted in a GDP growth of roughly 10%. Early reforms concentrated more on agriculture,
rather than manufacture, but this soon changed and it focused on broader sections. Now,
China is one of the worlds largest economy, both and population and total economic
product wise. It is possibly the worlds most important producer and manufacturer.
Both of these areas make up more than 40% of Chinas GDP. China is also the world
s largest exporter and the second largest importer, and it contains the fastest-growing
consumer market.(Investopedia). One of its largest and most successful industries
include telecommunication services and manufacturing. Just over 50 years ago, China
was struggling with poverty, repression and hunger, while now it is one of the globally
most important economic powers.

China is a mixed economy, like most countries are now, but uses the term socialist
market economyto describe their countrys economy. A socialist market economy is
based on the dominance of the government and a free market economy and was first
introduced by Chinas former president Deng Xiaoping. There are seven key
characteristics in a socialist market economy: 1. People can buy what they like to, but
only if they can afford it; 2. Money is essential to life; 3. People become forced to sell
anything to get money; 4. Focusing on profit over social needs; 5. "discipline over those
who produce the wealth of society is no longer exercised by other people (as in slavery
and feudalism) but by money and the conditions of work that one must accept in order
to earn money"(Nyu); 6. Scarce good are rationed through money instead of peoples
hard work or greater need for good; 7. People are responsible for their fate, no matter if
they are rich or poor. Even though China's economy is dependent on market forces and
involved capitalist, it still doesn't believe that capitalists are in control of their economy.

PAGE 10



Despite the denial, it is a form of state capitalism. The ideal rationale is that China is in
an early stage of socialism and socialist mode of production and the country must adapt
to capitalist techniques to advance.

Like any economy, there are advantages and disadvantages to each. Advantages in a
social market economy include people working harder and the variety of consumer
goods. Most people work very hard for their job or position, since losing the job and the
money they earn in it is a good motivator. The huge variety of consumer goods is another
advantage for those who can afford it. Another great advantage is the rapid
development of the economy. According to Nyu "The forces of production, or at least
those involved in making those things people with money at home or abroad want to
buy, undergo rapid development.

There are quite a few disadvantages to a socialist market economy as well. One of them
is the overproduction of goods. This is because workers as a class usually don't aren't
paid enough to buy the products. Nowadays machines do all the work so the gap
between what machines and workers can produce is enormous. Another major
disadvantages is the growing unemployment that comes with the machines. It is all about
profit for the owners of the machines. Social relations are basically impossible in a
socialist market economy, since there is a huge gap between the rich and poor. In most
cases, people with a lot of money think of themselves as better people, while the poor
feel envy and hatred for the rich.

How does the Chinese government deal with key economic questions?

"China has experienced uninterrupted trade surpluses since 1993. Total trade multiplied
by nearly 100 to USD 4.2 trillion in only three decades and, in 2013, China surpassed the
United States as the world s biggest trading nation."(Focus Economics). Chinas
enormous investment programs caused the country to become "a major manufacturing
hub"(Focus Economics) and this situation encouraged trade growth, especially in 2001,
when China joined the World Trade Organization. Since the economy is greatly
integrated in the global trade system, steady improvement in the 2000's trade, the
country steadily improved. However, the country's trading sector got dragged down in
2008-2009 because of the global economic downturn.

China has signed several multilateral, between three or more countries and bilateral trade
agreements. Multilateral trade agreements means a trade between three or more
countries and Bilateral means a trade between two countries. The Closer Economic
Partnership Arrangement with Macau and Hong Kong was signed in 2003. In January
2010, a Free Trade Agreement (FTA) between China and the ASEAN (Association of
Southeast Asian Nations) nations, consisting of Thailand, Vietnam, Indonesia, Singapore,
Philippines, Malaysia, Myanmar, Cambodia, Laos and Brunei was signed. This created the

PAGE 11



worlds third largest free trade area in terms of nominal GDP (Focus Economics). FTA
were established with countries like Singapore, Peru, Pakistan, South Korea, Australia,
New Zealand, Chile and Costa Rica as well. At the moment, there are other FTAs under
negotiation with Sri Lanka, Japan, the Gulf Cooperation Council and Norway.

China has become one of the biggest economies and has become the largest exporter
with a total of $2.37 Trillion in 2015. Chinas top 5 export products consist of mostly
machines making up nearly half of Chinas total export, with 48%. These include computers,
which makes up 7.9% and broadcasting equipment, which makes up 7.0% of its total
exports. Other exports products are telephones, making up 4.7%, Integrated Circuits,
making up 2.8% and office machine parts, making up 1.9% (Figure 2). Chinas top 5 export
destinations include countries such as the United States and Germany. 18% of Chinas total
export products get exported to the United States, 14.6% to Hong Kong, 6% to Japan, 4.4%
to South Korea and 3.0% to Germany (Figure 3).

[Figure 2, Janine Steinhaeuser]

[Figure 3, Janine Steinhaeuser]

PAGE 12


Besides being the largest exporter, China is also the second largest importer with a total
of $1.27 Trillion. Its top 5 import products consist of mostly Crude Petroleum and
Integrated Circuits. Crude Petroleum makes up 9.4% of Chinas total imports, while
Integrated Circuits make up 7.5%. Other import products include Gold, making up 5.2%,
Iron Ore, making up 3.4% and cars, making up 3.0% (Figure 4). Chinas top 5 import origins
include countries such as South Korea and Japan. 10.0% of Chinas total import products
origin from South Korea, 10.0% from the United States, 9.1% from Japan, 6.2% from
Germany and 5.8% from other countries in Asia (Figure 5).

China makes a lot


of its money
through its mining
industry and
manufacture Its
mining industry
extract 3.68 billion
tons of coal (2015
est.), 1,4 billion tons
of iron ore (2015
est.), 70 million tons
[Figure 4, Janine Steinhaeuser] of salt (2015 est.),
215 million tons of
oil (2015 est.), 124.3 billion cubic meters (2015 est.) according to Investopedia. China is
also known as a manufacturing powerhouse. The economy has a "large textile
manufacturing sector" (Investopedia), it supplies transportation devices, such as planes,
automobiles and trains, electronics, machinery, consumer goods and cement, The below
figure (Figure 6) shows the income inequality in China and shows a significant difference
between the rich and the poor.

PAGE 13


China makes a lot


of its money
through its mining
industry and
manufacture Its
mining industry
extract 3.68 billion
tons of coal (2015
est.), 1,4 billion tons
of iron ore (2015
est.), 70 million tons
[Figure 5, Janine Steinhaeuser] of salt (2015 est.),
215 million tons of
oil (2015 est.), 124.3 billion cubic meters (2015 est.) according to Investopedia. China is
also known as a manufacturing powerhouse. The economy has a "large textile
manufacturing sector" (Investopedia), it supplies transportation devices, such as planes,
automobiles and trains, electronics, machinery, consumer goods and cement, The below
figure (Figure 6) shows the income inequality in China and shows a significant difference
between the rich and the poor.

[Figure 6]

PAGE 14



[Figure 7]

Figure 7 shows the Gini Coefficient of China. "This statistic shows the inequality of
income distribution of China from 2006 to 2016 based on the Gini Index" (Statista) The
closer the value gets to 100, the higher is the inequality. The United Nations set a
warning level at 40. Chinas highest score is 49.1 in 2008.

PAGE 15


3.3 Key components of China

GDP $12.9T

GDP per capita $15,400 (2016 est.)

GNI per capita 14,160 (2015 est.)


(USD)

Population 1,388,232,693 (2017)

Years of schooling 13.5 (2016 est.)


(Primary to
tertiary)

HDI 0.727 (2014)

Unemployment 68%
rate

Life expectancy 75.8

Household $47,300
income

Ethnic groups Han Chinese 91.6%, Zhuang 1.3%, other (includes Hui, Manchu,
Uighur, Miao, Yi, Tujia, Tibetan, Mongol, Dong, Buyei, Yao, Bai,
Korean, Hani, Li, Kazakh, Dai and other nationalities) 7.1%

Export (partners) United States (18%), Hong Kong (14.6%), Japan (6%), South Korea
(4.4%), Germany (3%)

Important South Korea 10.0%, United States 10.0%, Japan 9.1%, Germany 6.2%,
(partners) Other countries in Asia 5.8%

Unemployment 4.2% (2016 est.)


rate

Government Government of China

Neighboring Russia, India, Vietnam, Pakistan, North Korea, Mongolia,


countries Kazakhstan, Myanmar, Afghanistan, Nepal, Laos, Kyrgyzstan,
Bhutan, Tajikistan (by land), Brunei, Indonesia, Japan, South Korea,
Malaysia, Philippines, Taiwan (by sea)

Debt 20.1% of GDP (2016 est.)

PAGE 16


4. Compare and Contrast

4.1 What are the similarities and differences

The United States and China are both one of the biggest economies in the world. Both
are very successful in terms of economic growth and trade, although they are different
economies. The United States has more traits of a free market economy, while China has
more traits of a command economy. In the United States individuals have more power
and are independent, while the government interferes sometimes to keep the economy
steady. In China, the government has a lot more control over individuals and their
decisions. Although the United States follow more of a free market economy compared
to China which follows more of a command economy both nations are the worlds
leading economies, but this only proves that both economies have good traits in terms
of economic growth.

There are quite a few differences between the two economies, since they follow different
systems. The major difference is the independence of individuals and government
interference. As stated before, the United States follows more of a free economy,
meaning that the government interferes very little with individuals decision. China on
the other hand follows more of a command economy, meaning that the government has
a lot of controls over individuals decisions. Other differences are all due to government
interference, such as owning private property. This again is associated with government
interference. In China, the government has control over it, so technically it cant be
considered a private property. On the other hand, in the United States you can own
private property and you have a lot of control over the things associated with it. Prices
in command economies like China, cannot rise like they do in free market economies, so
they are set by the government.

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4.2 Total exports GDP comparison

[Figure 6, Ticha Netfang]

The United States and China are both very big economies making up 36% of the total
world economy. Currently the GDP rate in the United States is ($18.7T) compared to
China that has a lower GDP ($12.9T), though the United States exceeds in gross domestic
product currently, in 2030 it is estimated that China will have a greater GDP. According
to IMF and the world bank, china now ranks as the largest economy based on Purchasing
Power Parity (PPP). Despite the recent slowdown, Chinas economy is growing at almost
three times the rate of the United States.

The two nations are even when it comes to exports. The United States imports more than
it exports and therefore as a trade deficit. China exports more than it imports, resulting
in a trade surplus. Studies on exports in 2015, show that the United States exported
$1,482B and China $2,466B, imports for the United States in 2015 are $2,242B and
$1,602B for China. The world trade in 2015 for the United States results in $3,724B and
$4,068B for China.

PAGE 18



4.3 Population growth between the two nations

Population growth in the U.S and China


1.6E+09

1.4E+09

1.2E+09

1E+09

800000000

600000000

400000000

200000000

0
1970 1980 1990 2000 2010 2017

United States China

[Figure 7, Ticha Netfang]

Chinas population of 1.3 Billion is around four times higher than the United States
population of 320 million. China by far as a larger population, providing a large domestic
market for the economy. Population growth encourages competition. Though a growing
population can be seen as a positive effect, it also has its downsides such as food scarcity,
and imposes constraints on the development of savings and human resources.
Population growth enlarges labor force and therefore increases the economic growth.
China has a lower GDP, because a higher population growth rate can lead to a decline
in economic growth which goes under Gross Domestic Product per capita. The reason
for the decline in the GDP per capita is due to the capital dilution, standard of living and
resource scarcity.

PAGE 19



4.4 Human development between the two nations

The HDI value in the United States is 0.920 and has a rank of 10 in the world human
development index, in comparison to China that has a HDI value of 0.738, ranking 91 in
the human development index. The HDI emphasizes the people and their capabilities to
assess the development of the country not just economic growth. The HDI is a
combination of the following topics: Health, knowledge and standard of living. The health
criteria is measured by life expectancy at birth, education is measured by the expected
years of schooling and the standard living criteria is measured by gross national income
per capita. The expected years of schooling in the United states is 17 years, in comparison
to China that has 13.5 years of schooling. A difference between the two nations are that
the United States have a higher HDI value which mean the United states are more
developed in terms of health, education and standard living.

4.5 Income inequality between the United States and China

One similarity between both China and the United States according to a new paper from
the economists (Thomas Piketty of the Paris school of economics) are that both have had
an extreme rise in income inequality since the 1970s. The division between the haves
and have nots have grown during the years in both nations. The top 20% of the
countries national income are taken home by Americas 1%. Over the same time in China
the top 1% doubled their income. China and the United states are both experiencing
grown of inequality income, though in the United States the problem is more extreme.
According to the economists, the economy in China has been so strong that despite the
widening inequality, the incomes of the bottom 50% have grown markedly. The income
of the poorest half of Chinese workers have grown more than 400% from 1978 to 2015.
The income inequality in the United States may be bigger, due to the HDI, more people
in the United States get an education and attend school for more years than they do in
China, which means that more people in the United States are educated.

PAGE 20



4.6 China and the United States by numbers

The chart shown above, shows the countries comparisons by economic leadership,
quality of life, energy and environment and international role. These factors help
determine which economy is more advanced, which will be discussed further below.

Economic leadership
$12.9T Gross domestic product (GDP) $18.7T
$19.39T Purchasing power parity (PPP) $17.95T
Quality of life
$15,400 Average income (GDP per cap) $53,750
4.2% Unemployment rate 4.7%
36% Freedom from corruption 75%
Energy and environment
6.19 metric tons Carbon emissions 5.31 metric tons
5,919,800,000,000 Average annual electricity usage 3,913,000,000,000
(kw-h)
4.3 Oil imports (2009, in billions of 9.6
barrels per day)
International role
22.1% Share of worlds good (export) 12.6%
18.6% Share of worlds good (import) 15.4%

PAGE 21



5. Which system is better?

Both economies have their advantages and disadvantages. Though the United States
follows a mixed economy, it follows more free market with little government interference.
The advantages to this are that the system has the freedom to act on changes in market
situations. Advantages in mixed economies with more traits of capitalism, like China are
that the Government takes more control and can protect people from bad influences in
the market. It is clear that both a mixed economy and command economy are effective
because the United States and China are both successful in terms of economy. Though
currently, the United States economy is stronger, it is predicted that China will soon
have the strongest economy in the upcoming years. This is due to Chinas past economic
growth, which is the fastest ever seen in history. In terms of GDP, China is currently doing
better, but in terms of HDI, the United States are.

In conclusion, both economies are doing exceptionally well, but China is doing just the
slightest bit better. This is because China has outstandingly good industries, and great
import and export values. All these factors contributed to a great GDP growth of roughly
10%. It is clear that neither of these two economies are perfect in any way, but both
countries have proven that either economy can work, therefore, there are benefits to
them as well.

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