View of Lujiazui, financial center of Shanghai, People's Republic of China
But hey, that’s the game for the big boys and girls in Washington, so let’s play ball! Here’s what real GDP growth looks like in the United States and China since Donald Trump came into the White House.
To briefly explain what these numbers are, this is GDP measured in purchasing power parity terms by the I.M.F. This compares GDP in different countries using the same set of prices for all goods and services. This means that cars, television sets, heart surgery, and haircuts are all priced the same across countries. Naturally, this process is not perfect (the items are not identical), but it does give us a ballpark number.
I then adjusted the numbers for inflation. (The International Monetary Fund gives the data in nominal terms.) I couldn’t find a proper deflator for international dollars, so I just assumed a 3.0 percentinflation rate. The true number is likely somewhat higher, but this should be close enough.
I then took three-quarters of the growth reported for the period from 2024 to the projected number for 2026. This is because Trump only came into office in January of 2025. That might overstate the growth under Trump slightly, since the economy was growing more rapidly in the second half of 2024 than it has been in the quarters since then.
It also gives both countries credit for the full second quarter, even though we are only halfway through the quarter. Also, these are projections, not actual growth data, but they likely should be close.
The basic story of China’s economy growing by $2.8 trillion, with the U.S. economy growing by a bit less than $1 trillion, should not be surprising. China’s economy is roughly one-third larger than the U.S. economy, and it’s growing 4-5 percent a year, compared with roughly 2.0 percent annually for the U.S. This means both that China is #1 and its margin over the U.S. is increasing.
There’s nothing wrong with being the world’s second-largest economy. Our political leaders should be focused on ensuring that people in the United States have good living standards. But if they are looking for something to boast about, they should find something other than being the world’s largest economy.
Dean Baker is a senior economist at the Center for Economic and Policy Research and the author of the 2016 book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. Please consider subscribing to his Substack.
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