Comparison of Us and China Economy

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GDP composite of china 2009 Physical capital accounted for almost 50% of total growth and labour for only a little over 10% over recent. Total factor productivity contributed the remaining growth, partly driven by the reallocation of labour from the rural sector to manufacturing. China’s savings are high but it is not the household saving, it is unchanged since 1990's, therefore the consumption is 35%. The corporate savings have increased due to the firm tendency to retain earnings. According to World scope data, over half of listed Chinese industrial firms did not pay a dividend over the past decade. FDI inflows to China reached $148 billion in 2008, up from $3.4 billion in 1989. Most of the FDI has gone into the manufacturing sector. Investment was mainly in the infrastructure included upgrading railways, roads, airports and power grid infrastructure. Exports were increased through promoting exports by reducing trade barriers. GDP composite of United State of America 2010 The savings in us is low as the consumption is 71%, as us have a large domestic population within an easily accessible geographic location. It's almost like a huge test market for new products. That advantage means that U.S. businesses have become very good at knowing what consumers want. The investment is 13%, most of this is in non-residential investment. This consists of business equipment, such as software, business equipment, and manufacturing. Import and export have opposite effects on GDP. Exports add, while imports subtract, from GDP. Imports are greater than exports, and so the net effect of trade is a deficit and its net export it –3% The government spending is 19% because state and local governments can't spend more during a recession. They are usually mandated to balance their budgets, and so must cut spending when tax revenues

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