The American consumer consumption is as much as 68% of GDP, while in the case of China it is only 37%. For many reasons, China is unlikely to be able to even come close to the structure of American GDP, because the Chinese consumer would ultimately have to consume almost twice as much as today.
Figure 1 shows a comparison of the GDP of China and the USA according to the share of individual components.
Americans use a different methodology than the rest of the world and instead of Gross Fixed Capital Formation we have Gross Private Domestic Investment. One of the main differences concerns Gross Government Investment, which in the American approach is in the government spending component (specifically “Government Consumption Expenditures and Gross Investment”). After moving Gross Government Investment to GPDI, we get Figure 2.
But the key message is China's different GDP "model", where consumer spending is relatively small. Additionally, when we look at Chinese retail sales… they changed the trend after 2020… see Figure 3 and Figure 4.
Figure 4 shows Chinese retail sales as a rolling sum of last 12-month (TTM). Clearly, after 2020, there has been a “change in trend” and the Chinese consumer is now “spending less” than before Covid. The Chinese consumer is certainly also influenced by the falling house prices (and stocks on the capital markets). And in the USA, stock and house prices are rising, and the consumer himself is doing quite well in terms of his expenditures... see Figures 5 and 6.
Key takeaway: to sustain economic growth, China must rely mainly on exports and investments (Gross Capital Formation), and exports seem to be the most reasonable option... including the probable devaluation of the Chinese yuan.
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