US extends lead over China in race for world’s biggest economy

US GDP rose 6.3% in 2023, outpacing China’s 4.6% gain; shares hit all-time highs

 

WASHINGTON- The United States has pulled further ahead of China in the race for the world's biggest economy, thanks in part to a vibrant American consumer.

US gross domestic product (GDP) rose 6.3 per cent in nominal terms that is, unadjusted for inflation in 2023, outpacing China's 4.6 per cent gain. While some of the outperformance reflected America's elevated price increases, the 2023 outturn underscores a broader point: The US economy is emerging from the pandemic period in a better place than China's.

"It is a striking turn of fortunes," said Dr Eswar Prasad, who once led the International Monetary Fund's (IMF) China team and is now at Cornell University. "The strong performance of the US economy, in tandem with all the short-term and long-term headwinds the Chinese economy is facing, renders it a less obvious proposition that China's GDP will someday overtake that of the US." The economic outperformance is reflected in the respective countries' stock markets. US shares have hit all-time highs this week, while Chinese equities are mired in a US$6 trillion-plus (S$8 trillionplus) bear-market rout.