Hello.
I don't understand economy much as i ain't in that field, so I wanted to ask, how does China US economic comparison in dollar term works?
China has been using own Labour base for doing manufacturing & now they are manufacturing of their own using local Labour & resources. Minus the import, they have been using their own currency, isn't that right?
And for US , they have printed 5 trillion in 5 months which is 1/4 th of their entire GDP. So how much of it is real?
It is difficult to compare any two economies because there is way too much to compare. GDP is actually one of the most useless statistics, it's only good for a broad indication of the size of an economy. China's GDP is 13+ trillion dollars today, and US GDP is 20+ trillion. All that tells us is that China's economy is pretty big but not as big as the US. There are too many differences between these two countries.
China is unrivaled when it comes to manufacturing thanks to a few reasons, including its sophisticated logistics network and work culture, and large population which means a large talent pool, among other factors. But there are a lot of things that China doesn't do so well. For example, it's difficult to keep cash within China's borders, partly because of the archaic financial policies and also because rich people have better places to spend their money in. This makes it difficult for the government to collect the proper amount of taxes and fund state-owned programs, which is a big headache for a socialist government.
On the other hand, the US has a much more open financial system which makes it easy to move money to and from the country, which means people feel comfortable to keep cash inside US borders - but not the case for China. The US has some of the best talent in the world and that's not a coincidence, because US institutions have a well-deserved reputation for high-end R&D in certain areas. However, there is relatively little manufacturing in the US, because worker costs are very high and the country overall has been slow to adapt to some technologies that we take for granted in other parts of the world, e.g. digital payment. The extreme focus on private corporations has given US companies a larger competitive edge but also contributes to wealth inequality.
So it's impossible to use statistics alone to compare the Chinese economy with the US economy. The only way to get an accurate picture is to examine a lot of different aspects, so that you can consider qualititative factors as well, not just quantitative.
As for the US printing 500 billion dollars in 5 months (not 5 trillion, that's a stupid number), all of it is real. The USD is issued by US banks under the guidance of the US Federal Reserve, which is the central bank dictating fiscal policy. It has value because they say it has value, and also because everyone around the world loves trading in USD so everyone also says it has value. I also love USD because everyone else uses it, it's accepted everywhere, and it's easy to move around.
One of the bastions of the US economy its ability to print its own currency without consequences. That's how the US government never runs out of money. The US national debt is 26.7 trillion dollars, but do they need to care? No! As long as international trade continues to be conducted primarily in USD, they can print as many magic dollars as they want. Even though China is breaking away from the US dollar in some areas, like by trading oil and minerals in yuan, they are quietly collecting more USD at the same time, because USD is the most powerful currency today. It is very difficult to make international USD payments from China, because Chinese banks understand that today, if you have no USD you lose.
