Over the past 40 years, China's economy has grown rapidly, with international institutions predicting when our GDP could catch up with that of the United States.

At the smallest gap between China and the US, we were nearly 80% of the US's GDP.

However, the US's interest rate hikes have reversed this trend.

Why is that?

Will this gap continue to widen?

Can China break the so-called "70% curse"?

Since the 1980s, the economic comparison between China and the US has undergone a rare change.

Notably, China's share of the US's GDP has been on a downward trend.

In terms of annual GDP, in 2021, China reached an astonishing $17.82 trillion, accounting for 77% of the US's GDP.

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However, in the following two years, the situation reversed, with China's share of the US's GDP dropping to 70% in 2022 and further to 65% in 2023.

Faced with this situation, the US media has even joyfully declared that China's GDP will never surpass that of the US.

In addition, they have begun to advocate the so-called "70% rule," which suggests that once a country's GDP reaches 70% of the US's, the US will take various restrictive measures to suppress its development and successfully maintain its position.

There are countless historical cases, such as in the 1970s when Japan and the Soviet Union faced similar bottlenecks and could never cross the 70% threshold.

So, can China really break this so-called "70% curse"?

Let's look at a set of data: in 2008, China's GDP was only 31% of the US's, but by 2018, it had grown to about 68%.

Then the US's disruptive actions came, with trade wars, interest rate hikes, and technology wars following one after another, attempting to suppress China and make China follow the old path of Japan and the Soviet Union.

The outcome seems to be as the US wished, with China's economic growth slowing down, but this is more due to the impact of the US's interest rate hikes.

We must understand that the US's interest rate hikes are not perpetual; this time, the US's interest rate hikes have broken the average cycle of interest rate hikes by the Federal Reserve over the years.

The US also faces internal and external troubles due to interest rate hikes, such as recent news showing that the Federal Reserve lost more than $110 billion in 2023.

Why the loss?

Because the Federal Reserve has to pay interest to state banks, and the high interest rates in the US have been maintained for too long.

The US is still facing three paradoxical contradictions: inflation, financial institution crises, and the US debt crisis.

To suppress inflation, interest rates must be raised.

But raising interest rates will trigger financial institution crises, including banking crises and crises at the Federal Reserve, and eventually the US debt crisis, with high benchmark interest rates inevitably leading to higher US debt interest rates.

However, it seems unlikely that China will follow the old path of Japan and the Soviet Union.

Recently, Yellen is visiting China.

As the US Treasury Secretary, her purpose for coming to China is quite simple: the US government's fiscal deficit.

After all, this is Yellen's responsibility.

We must also know that Yellen has been the chair of the Federal Reserve, so the relationship between the US Treasury and the Federal Reserve is not as clear as it seems to the outside world.

In other words, the Federal Reserve is no longer independent and has been largely interfered with by the authorities, trying to influence the progress of China's economic development.

But to a large extent, this has disrupted its own rhythm, and in the end, Yellen still has to come to China.

It is clear that China will surpass the US.

China is not the Soviet Union or Japan.

I clearly tell everyone that today's China is a combination of Japan and the Soviet Union.

Of course, this is just a simple analogy.

Our economy is not at the same level as the Soviet Union, and Japan's strategic depth and resources are not on the same plane as ours.

So, the US's attempt to defeat China by using the same methods that defeated the Soviet Union and Japan, through technology competition or trade wars, is clearly out of strength.

Just as we entered the end of 2022, the US suddenly announced an interest rate hike, which was a historic moment!

The result was that a lot of money all rushed into the US, sending the value of the dollar soaring.

And the currencies of other countries, including our own, were all losing money, and there was no way to avoid this issue.

Especially the yuan, which has been depreciating against the dollar for the past two years, causing a significant blow to our country's GDP.

It's not just us; other countries are also being impacted, such as the continuous decline in the exchange rates of the euro, the pound, and the yen.

Especially the yen, which has fallen particularly painfully, causing Japan's GDP to fall to the fourth place globally last year, even being overtaken by Germany.

This is really unfair.

The fundamental reason is not their poor economy but the significant depreciation of the exchange rate.

In addition, inflation in Europe and America is severe, making people less enthusiastic about consumption, and the main manufacturing bases in Asia have seen a significant reduction in orders, and export businesses have become depressed.

These issues have put a lot of pressure on China's export market, coupled with poor domestic consumption and investment conditions, making the overall economic situation worse than before the pandemic.

In contrast, the US economy is now driven by "strong stimulus," such as releasing funds, giving money to the people, and encouraging everyone to consume to drive the economy.

Then, through the hegemonic status of the dollar, it transfers the pressure of inflation to the whole world.

Although this method may seem good in the short term, it will definitely not be sustainable in the long run.

This time, China has chosen to deepen reforms.

Although it may seem more difficult at the moment, it will yield better returns in the long run.

Speaking of which, due to the excessive use of stimulative policies, the US is now heavily indebted.

Their national debt has now approached $35 trillion, and it is clear that the US government is very anxious.

It is particularly worth mentioning that the export growth of the "new three" such as new energy vehicles, solar panels, and lithium-ion batteries is very fast, especially the export of vehicles, which has already ranked first in the world, and the export of new energy vehicles is driving the tide of China's industrial upgrading.

Although in the short term, the gap between China and the US may become more apparent, this does not mean that the long-term trend will be the same.

If we consider from a long-term perspective, the gap between China and the US will actually narrow slowly.

After all, the US has stopped raising interest rates.

It is important to know that high interest rates cannot be sustained for long.

It is estimated that this year, the US is likely to lower interest rates again.

When the interest rates of the dollar decrease, the value of the yuan is expected to appreciate, and the difference will come back at once.

In addition, with the acceleration of the global process of de-dollarization, the decline of the dollar is a high probability event, and the appreciation of the yuan is also in a major channel of national fortune.

Short-term fluctuations are normal.

In summary, we should clearly recognize that China's rise has not been completed.

It is unwise to deny that China is currently in a rising stage just because the gap between China and the US has expanded in the past two or three years.