Wikipedia defines Gross Domestic Product (GDP) as the monetary measure of the market value of all the goods and services from a nation in a given year. It should be noted that this is not a precise statistic, but does provide a useful measure of a country’s economic health.
In round numbers, US GDP for 2025 is generally expected to approximate $30.5 trillion while China’s GDP for the same period is expected to approximate $19 trillion. By comparison, the GDPs for the world’s next five economies are each expected to fall within a range of $3-5 trillion.
Periodically, some estimates of growth rates for the Chinese economy have given rise to speculation that China’s GDP could surpass the US in a relatively short time. Recent events suggest that this is not likely to happen anytime soon, if ever.
Investors should focus on two key metrics. One, China’s economic growth prospects are difficult to estimate and have shown some signs of stress in recent months. Two, GDP for a country has some relevance. However, GDP per capita would seem to be more important for most people. For 2025, US GDP per capita is expected to approximate $89,000, while China’s is likely to be closer to $14,000. These comparisons are more significant in assessing relative standards of living.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA
