(Continued from Part 3)
Another point to remember is that China is an emerging economy whilst USA's is a developed economy. China is seen to 'emerge' because it is still in transition from a planned economy to a more market economy, and by doing so it has taken on economic reforms and policies that support development, as discussed in Parts 1 and 2.
Being an emerging market, China would receive more FDI than USA, and it is interesting to note that much of it comes from the USA, about $60.5 billion in 2010. USA, being a developed economy, would normally receive less transfers and FDIs - China's FDI in the USA was only $3.2 billion in 2010. Besides that, the population growth in China, most startlingly, was 0.48% compared to USA's 0.9% in 2012. Although the rate population growth is usually higher in developing and emerging economies, in China's case, I think it is urbanisation that really counts (discussed at the end of this paragraph). Lastly, the transition from an agricultural economy to a more industry and service based economy is still an ongoing process in China, with many millions from the rural areas in China migrating to urban areas every year, with a rate of 2.3% between 2010 to 2015.
Therefore, as of 2012, China remains the second largest economy in the world, not because it does not have the capacity to but because it is still emerging and transitioning. Some predict China will overtake the USA to become the largest economy in the world by the end of this year, while some say by 2015. Then there are also those who are worried about the Chinese economy imploding the way Japan's did about 2 decades ago. In my opinion, China's rise to become a leader in manufacturing seems inevitable, but for how long China can remain in the number 1 spot is anyone's bet.
Cheers
zhusun
Further reading:
https://www.cia.gov/library/publications/the-world-factbook/geos/us.html
https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html
http://www.ustr.gov/countries-regions/china
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