America and China, two elephants in the room. The American economy has seen many ups and downs over the past 20 years, e.g housing crisis of 2008-2009, where Lehman Brothers collapsed, unemployment peaked at 10%, housing prices fell by almost 30%, and the Federal Reserve cut interest rates to near-zero and the American GDP contracted by 4.2%. S&P 500 dropped more than 50% from its peak in 2007, and the US government injected $700 billion in a bailout package to banks.
During COVID-19, American GDP contracted by 3.5%, unemployment peaked at 14.7% in 2020, lockdown paralysed the economy, and the Federal Reserve cut the interest rates to zero.
But the American economy has also seen a boom in technology and innovation. The American GDP of $13 trillion in 2005 is expected to grow to $28 trillion in 2025. The S&P 500 nearly got 4x in 20 years, and in 2022-2023, unemployment was at 3.5%.
The US will be the world leader in AI and innovation, and the dollar will likely remain a world reserve currency. The US economy is very likely to flourish, and its GDP is expected to grow by 1.5% to 2.5% annually. And you will see real-time, productive and consumer-oriented AI and automation over the next couple of decades.
While the US economy may slip from top position to second position in the next 20 years, it will remain the technological and innovation leader with a strong consumer market in many sectors, and while AI may displace some jobs, it will create new roles.
Over the past 20 years, we have seen how the US is a very resilient job market and has a leading innovation ecosystem, strong corporate earnings and tech dominance.
New frontiers of innovation between America and China will be Quantum Computing, Space and Defence technology.
Second elephant
Over the past two decades, China’s economy has been doing tremendously well, from a global industrial hub to a tech-driven and service-oriented economy. One might say that its growth came down from double digits to single digit and has slowed down, but China is on track to be the central player in global trade, supply chain and innovation.
China’s GDP of $2.3 trillion in 2005 is set to expand to almost $19 trillion in 2025.
China is now focusing on self-reliance, sustainable growth and stability, in order to defend its economy from global politics and restrictions on products which are essential for China’s economy, especially semiconductors, as we have seen at the beginning of 2025, Trump’s tariff on China.
China has opened its doors to foreign investment and, most importantly, built new infrastructure at a tremendous level. There has been a rapid growth in the tech sector, a few big names are Huawei, Alibaba and Tencent and of course TikTok, a popular app around the world which is used by billions of people and a successful source of income for many.
And don’t forget the Chinese AI chatbot DeepSeek, as I mentioned in my earlier article, My Imagination or My Artificial Intelligence. “On January 27, 2025. Wall Street lost almost 1 trillion US dollars in a single day just because investors could not digest that a Chinese start-up called DeepSeek, an AI chatbot which was launched just a week ago, became the most downloaded app in Apple’s App Store in the US and UK. Nvidia, the leading chipmaker in the world, lost almost $600 billion in market value in a single day, something that Wall Street has never witnessed before in its entire history.”
President Donald Trump said that “this should be a wake-up call for the US tech industry”.
China is making headlines in EV cars, too. A notable name here is BYD, which is gaining ground in many countries around the world. One might think that it’s a matter of time now that China, which is a world powerhouse, will soon become a world’s superpower. A title that will shift from West to East.
China has about 40% of global rare earth reserves. But what actually gives China the upper hand is its ability to refine and process rare earth minerals. China refines and processes almost 90% of all rare earth minerals globally, a massive gap between America and China. China has been investing in the refining and processing infrastructure since the 1980s and now has complete supply chain control from mining to magnets.
And don’t forget the heated conversation on February 28, 2025, between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy, one of its kind on live TV. The US government was mainly after the Ukrainian rare earth minerals deal, which explains how important these minerals are for the future of EVs, green energy, smartphones and most of all for defence technology.
For now, China controls the rare earth supply chain and has the most efficient refining and processing infrastructure, something that many developed countries are decades behind.
America and China are the two elephants in the room. America has fought many wars over the past 20 years, notably in Iraq and Afghanistan, where they spent 20 years fighting and achieved nothing and left in a very disgraceful way, while China has not fought any major war in the last 20 years.
Time will tell who will be shaping the world’s economy and geo-politics in the future. But it’s very likely that China is in full steam ahead to take the throne of the world’s Superpower because they chose economy over wars, the wise elephant.
This article is written by Jordan Zaman.
Published 26 May 2025