USA Government and china

Economic growth in the US is also supported by trade, despite economic growth the economy is also characterized by unemployment and inflation, high rates of both unemployment and inflations are also as a result external shocks. The government has to balance the rate of inflation and unemployment as stated by the Phillips curve which states that as inflation increases then unemployment declines, in the present times the US has incurred high trade deficits as a result of high imports and at the same time low imports resulting to the deficit.

Population increase has led to the consumers to increase demand for goods which include the imports, the low cost of imports also has led to an increase in the demand for this imports resulting to trade deficits. China: China also experiences high economic growth like the United States, china however has more resources than the US, it also has a larger population who increase the labor resources in the economy.

Therefore the existence of a larger resource base is an added advantage to china for development. There are some factors that hinder development in china and this include internal conflicts that cause political and economic instability, this include conflicts in Tibet, Taiwan and Hong Kong, these conflicts also discourage foreign investment which supports economic development.

China’s efforts to unite Taiwan and Tibet is an effort to capture resources that will aid in development, however despite all the conflict china still remains a developed country and has a high GDP level compared to neighboring states.


Brian Snow (1997) Macroeconomics: Introduction to Macroeconomics, Rout ledge publishers, London Philip Hardwick (2004) Introduction to Modern Economics, Pearson Press, New York Stratton (1999) Economics: A New Introduction, McGraw Hill Publishers, New York