Economic systems refer to institutions and laws in a certain country that determine the owner of economic resources as well as the ways such resources change hands between people. More so, economic systems give directions on the way resources feature in the production process for various economic services and goods. Economic systems differ from country to country. The rationale for the difference in economic systems between countries finds its basis upon the different resources and economic environments between countries. In light of the above, the content below highlights some of the distinct differences between the economic system of China and that of the United States of America.
United States
The economic system in the United States of America (US) consists of social institutions, labour and business organizations, as well as individual people. At their capacities, the parties stipulated above play various roles in the economy as workers, consumers, investors, or savers (A.U.C. 1). The U.S. features a system where the people have the mandate to contribute towards public policies too – by way of voting. Ideally, the most crucial organizations in the U.S are the business firms whose major focus is the production and the distribution of services and goods to the consumers. Additionally, the U.S economy features Worker representation through labour unions. Therefore, the labour unions are also a very integral part of the economic system in the US. Cooperatives and nonprofit organizations also feature significantly in the economic system of the US.
The economic system of the United States features a capitalistic foundation. Ideally, the market in the economy exists in a manner where the consumers and the producers of all kinds of products in the economy – goods and services – determine the ideal prices of the products. An economic system depends a lot on the selling and buying of goods and services. That is, the working of an economic system comes to life only with the existence of a market where both sellers meet to exchange numerous products. In light of the above, the nature of US’s economic system stipulates that the individuals own all the products they produce or acquire from the market. The above provision allows both individual business firms and individuals at personal capacities to control the factors of production it the US economy (A.U.C. 1).
The producers of both services and goods in the U.S not only decide what products to offer on the market, but at what prices they offer their goods and services. However, with respect to the capitalistic nature of the economy, the consumers of the offered goods in the U.S are freely at liberty of deciding what goods to buy and at how much they will pay for the goods or services they decide to acquire (A.U.C. 1). Essentially, the economic system of the U.S features a market platform with great interaction between production competitors who are in constant pursuit of making the best profits, and consumers yearning to pay the least possible for the goods and services. Such interactions relate naturally to determine the most optimal product prices.
China
Different from the US, China operates as a communist nation that features a socialist economic market structure. With respect to nominal Gross Domestic Product, it is the second largest economy in the world according to the IMF (Economy Watch 1). A socialist economic system is quite controversial with respect to the aspects of social welfare growth and the economic development of a country. Initially, socialist economic market structures surfaced as a means of uplifting the majority working class from suppression by owners of land and capital.
Ideally, the socialist economy system portrays a market structure whose major intention is providing the greatest possible equality or ownership over the production factors to the working class. As it stands out in China, the rationale behind a socialist economic system finds its basis upon the believe that it is socially serviceable as well as equitable form market structure with the ability of achieving maximum potentialities of all citizens in a country (Economy Watch 1).
Unlike in the capitalistic economic systems where the entire production means belong to the individuals, the socialist economic system features a market structure where the production means belong either to workers in a collective manner, or to the state government. In light of the above, the socialist economic system in China features the aspects of wealth redistribution among the relatively poor, nationalization, the management of demand levels, as well as the stipulation of measures for minimum wages (Oakley 13). Under the above economic system, the market structure is centrally planned. It functions under the imposition of quotas for the production of goods and services. The above means that unlike in the capitalistic structure where market prices depend on the interactions between the sellers and the buyers, the prices of the goods and the services follows a predetermination by the state.
Essentially, the most basic framework aspects within the Chinese socialist economic structure do not vary a lot from the mainstream socialism. The market structure features central planning of public enterprises. Public enterprises’ management is by the state. It features a mixed economy where the public enterprises exhibit participatory planning (Economy Watch 1). Ideally, the market structure in the Chinese socialist economy has the state under the control of the production means and a market guided and directed through the provisions of the socialist planners.
GDP Analysis
The Gross Domestic Product is a value of money from all products a country produces within its borders during a specific time era – mostly annually. It is a measure that features the consumption by the public and the private, the outlays by the government, as well as investments and exports – excluding the imports for the same period (World Bank 17). GDP is an indicator of a country’s economic health as well as determining the standard of living within a country. The rationale behind the application of GDP to measure the economic standard of a country finds its basis in the fact that it concentrates on production within the borders of a country.
The last GDP, Annual for the year 2014, was 17,419.00 Billion dollars in the United States. The GDP per capita was 46,405.26 dollars for the same period. On the other hand, the GDP for China in during the same period was 10,360.10 Billion dollars and a GDP per capita of 3865.88 dollars. From the above, it is quite visible that although the GDP of the US is the only 1.7 times bigger than that of China, the GDP per capita of the same is 12 times bigger denoting the economic health of the US with relation to China. However, regarding the growth rate, China exhibits a strong growth in GDP with a 1.70% from the previous year while the US’s growth was a negative 0.20%. In light of the above, although the GDP per capita for the US is way stronger than that of China, the GDP Growth Rate for China exhibits a more productive economy than that of the US (Trading Economics 1).
Works Cited
A.U.C.. 'U.S. Economic System'. Theusaonline.com. N.p., 2015. Web. 23 July 2015.
Oakley, Sheila. Labor Relations in China's Socialist Market Economy. Westport, Conn.: Quorum Books, 2002. Print.
Economy Watch. 'Socialist Market Economy'. Economy Watch. N.p., 2010. Web. 23 July 2015.
Trading Economics. 'China GDP Per Capita 1960-2015'. Tradingeconomics.com. N.p., 2015. Web. 23 July 2015.
Trading Economics. 'United States GDP per Capita 1960-2015'. Tradingeconomics.com. N.p., 2015. Web. 23 July 2015.
World Bank. World Development Indicators. Washington, DC: World Bank Publications, 2003. Print.
