The United States' economy is expected to have grown by 2.5 percent in 2023, with a nominal GDP growth of 6.3 percent, not adjusted for inflation. The US seems to have consolidated its lead in economic size to China and the European Union.

The main reasons have been the continuing depreciation of the euro, and the decline in labor force growth, the aging population, and high social welfare costs in the eurozone. But more importantly, it has been due to the excessive macro leverage ratio of the eurozone, which limits the room for further leverage. The US is relatively free to determine its debt levels and thus is able to maintain a strong dollar in a world of sluggish growth.

The total factor productivity of the eurozone began to decline in 2008, lagging 10 percent compared with that of the US now. Big US technology companies including Amazon, Alphabet, Microsoft, Apple, and Tesla have boomed in recent years. While the EU lacks emerging technology companies, and its traditional automobile, chemical, machinery and other industries have been weakening due to the energy impact caused by the Russia-Ukraine conflict.

The lack of emerging technology companies also makes it difficult to improve labor productivity in Japan and it too suffers from long-term challenges such as aging and labor shortages. Japan's GDP is almost certain to fall to the fourth place in the world last year overtaken by Germany. Japan's decline was mainly due to the depreciation of the yen's exchange rate.

Last year, the Japanese stock market boom was not supported by improving economic and corporate fundamentals, but by the Tokyo Stock Exchange forcing listed companies to use savings to buy back shares or increase dividends, and uncertainty about the Federal Reserve's interest rate policy led to large capital inflows into Japan, forming a stock market boom supported by temporary liquidity.

Meanwhile, the actual growth rate of China's GDP last year was 5.2 percent, which was much higher than that of the US. However, China's consumer price index rose only 0.2 percent year-on-year. In addition, the renminbi depreciated significantly last year.

It should be seen that the US has mainly relied on debt to support its consumption boom. Last year, federal debt reached $34 trillion, and corporate debt was equivalent to about 75 percent of GDP, which is even more serious than in 2008.

Although China's economy has suffered from its real estate downturn, the investment in high-tech manufacturing and emerging industries has grown rapidly, and the international competitiveness of some industrial clusters has improved. China has never ceased vigorously optimizing its economic structure and continuously improving production efficiency through technological innovation to give the economy greater future competitiveness.

Besides, Chinese policymakers need to further expand domestic demand, maintain reasonable growth in both the economy and prices through proactive fiscal and monetary policies, so as to better maintain confidence amid domestic adjustments and international competition.

21ST CENTURY BUSINESS HERALD