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Discuss the importance of GDP and GDP per capita in measuring an economys performance and compare GDP performance between China and the rest of the world based on this article.

Chinese Economy Powers ahead While the Rest of the World Reels

China ended the Year of Covid in many ways stronger than it started, accelerating its movement toward the center of a global economy long dominated by the U.S.

While the U.S. and Europe wait for vaccine rollouts to get fully back on track, China is the only major economy expected to report growth for 2020, helping it close the gap with the U.S.

It has expanded its role in global trade and shored up its position as the worlds factory floor, despite years of U.S. efforts to persuade companies to invest elsewhere. Chinas consumer marketlifted by its quick recovery from Covid-19keeps gaining momentum, making it a bigger driver of global companies earnings.

And the country has solidified its standing as a force in global financial markets, with a record share of initial public offerings and secondary listings in 2020, large capital inflows into stocks and bonds, and indexes that far outperformed even the U.S.s strong showing.

The upshot is a world more reliant on China for growth than ever before. For 2020, Chinas economy is expected to account for 16.8% of global gross domestic product, adjusted for inflation, according to forecasts by Moodys Analytics. Thats

up from 14.2% in 2016, before the U.S. and China entered a trade war. The U.S. is expected to make up 22.2%, virtually unchanged from 22.3% in 2016.

Chinas 2020 increase in its share of global GDP1.1 percentage pointsis its largest in a single year since at least the 1970s.

That strategy paid off when, unusually in a recession, U.S. consumers kept spending heavily. Chinese factories were ready to serve them. That helped support Chinese jobs and Chinas own consumer spending through the rest of the year.

China also benefited because it is hard for foreign manufacturing firms to relocate, even after pandemic disruptions left many executives wanting to diversify their supply chains. Companies have to weigh losing the network effect of having so many other suppliers nearby, as well as the risks of moving elsewhere after China has proved so reliable.

A November survey by HSBC Holdings PLC of more than 1,100 global corporations found that 75%, including 70% of U.S. companies, expect to increase their supply-chain footprint in China over the next two years.

Trade tensions

For the rest of the world, Chinas success is a double-edged sword. Chinese demand has been a godsend for businesses that sell to China, including commodity producers as well as auto makers and luxury-goods companies that lost sales elsewhere.

Chinas renewed strength has also left businesses more exposed to a country whose leaders have made clear they want to reduce Chinas reliance on foreign

companies in favor of building up more of its own corporations.

In the U.S., the Trump administrations tariffs on China were meant to address imbalances in the global economy and level the playing field between the two countries.

Instead, China is expected for 2020 to record the biggest surplus in its current accountthe broadest measure of a countrys transactions with the rest of the worldin history for any country, according to Capital Economics, a research firm.

till, measured as a percentage of world GDP, Chinas account surplus was even bigger in 2007 and 2008.

China continues to face some big economic challenges, including an aging population and rising labor costs, which make manufacturing more expensive. A recent rash of credit defaults by state-owned enterprises has added to longstanding worries over debt. And its momentum in manufacturing could ebb this year, if other parts of the global economy begin firing on all cylinders again.

Some economists say the countrys state-led economic model has blunted private-sector innovation that is potentially vital to Chinas future.

Since Covid-19 emerged, however, Chinas economy has been resilient, bolstering Beijing leaders belief that their system offers a more dependable alternative to Western democratic capitalism, especially during times of crisis.

The U.S. remains the worlds No. 1 economy, with the largest consumer market, a much higher standard of living and a currency whose importance dwarfs that of the Chinese yuan. Americas GDP is 50% greater than Chinas.

The U.S. is also grappling with extreme political stress. This year, it is expected to grow around 3%-4%, but its economy likely wont get back to its 2019 size until the second half of the year, according to some economists forecasts.

China is expected to grow as much as 9% this year, according to Morgan Stanley estimates.

China will always remain our main market, said Chung Yong-soo, director of the global business management division at South Korean snack maker Orion Corp. , best known for a marshmallow-filled treat called Choco Pie.

The company launched a tie-up with PepsiCo Inc. in the 1980s to bring new products it could sell in the South Korean market. Increasingly, though, selling its products in China is what matters most to its bottom line.

Orions operating profits in China jumped 28% in the first three quarters of last year compared with the same period a year earlier, thanks to the introduction of new products into the market, including glutinous rice cake-inspired Choco Pies. China sales accounted for 48.2% of Orions overall revenue in 2019, compared with 38.7% in 2010.

Factories restarted

For years, economists warned that Chinas rising labor costs, deepening debt and ebbing productivity gains would imperil its status as the worlds factory floor. The trade war and higher tariffs further cut into Chinas advantages.

But Chinas share in global exports of goods is still growing. It was 15.4% in November, the most recent month for which data was available, compared with

13.7% late 2019, before the pandemic came into full swing, according to Oxford Economics.

The gain was driven in part by Chinas quick pivot to sell personal protective equipment, such as masks and respirators, whose sales have surged during the pandemic.

Beijing forcefully intervened to contain Covid-19 and help keep factories and businesses open. It sealed off large parts of the country and barred people from leaving their homes for extended periods, moves that would be difficult in countries with more freedoms.

About 4,600 people have died in China as a result of the pandemic, according to the countrys health ministry, although that number is thought to be underreported by some researchers. In the U.S., the death toll is close to 380,000.

It ordered state-owned banks to halt debt collection on affected businesses and individuals while offering fresh credit to small firms at cheaper-than-usual rates. Local officials required factory owners to meet tough standards to ensure safe operations, including, in some cases, tracking workers connections to affected regions.

Many local governments, including the city of Foshan, dispatched shuttle buses to bring migrant workers stranded in villages back to factories once the virus was gone. Larger manufacturers, such as Foxconn Technology Group, which assembles Apple Inc. products in China, offered workers bonuses up to $430 per person to come back to work.

Chen Xin, co-founder and general manager of Foshan Nuobio Electrical Appliance Co., said he personally worked on his companys assembly line along with two partners and their wives to ensure orders for air purifiers were met during the pandemic. Local authorities made sure the factory passed inspections before reopening, the 37-year-old Mr. Chen said.

Other companies, including consumer electronics manufacturers, saw stronger-than-usual export orders. In November, Chinas exports grew at their fastest pace in nearly three years, resulting in a record trade surplus of $75 billion that month. It dipped a bit in December.

Kleva Health, a San Francisco-based startup that sells at-home Covid-19 testing kits, needed large numbers of saliva collection tubes last summer.

David Yu, the companys 31-year-old founder, said he initially decided to go with tubes made in Canada but abandoned the plan after finding that ones made in southeastern China were less expensive and more accurate.

The company is awaiting approval from the U.S. Food and Drug Administration to sell the testing products to average Americans.

Expanding consumer market

Consumer spending in China bounced back by the fall. Chinas personal luxury-goods market is expected to have grown 7.6% in 2020, even as the global market contracted 20%, according to research firm Euromonitor International.

While the rest of the world has stopped spending, the Chinese have carried on, said Fflur Roberts, Euromonitors head of luxury-goods research.

While foreign direct investment, such as by businesses for production assets abroad, into the U.S. and Europe plummeted in the first half of this year, it largely held steady in China, where it was up 6.3% through November, compared with the previous years 11 months, according to Chinas commerce ministry.

Money has flowed into China in other ways, adding momentum to its long-term goal of building up important domestic financial centers. Chinese markets, including in Hong Kong, accounted for 43% of the worlds public listings last year, according to data from Refinitiv.

Foreign holdings of Chinese bonds hit a record 3.25 trillion yuan, or about $503 billion, in December, up 49% in a year, according to data compiled by Bond Connect Co.

The MSCI China index, which includes Chinese companies listed at home as well as those that trade in New York or other locations, rose 27% in dollar terms last year. The MSCI AC World index is up 14% in the same period, and MSCIs U.S. benchmark added 19%.