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Measured in current US dollars China’s GDP is smaller than that of the US; but the...

  1. Measured in current US dollars China’s GDP is smaller than that of the US; but the total investment expenditures in China, measured in US dollars, is much higher in China. Why is that?
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Answer #1

When you see the calculation of gross domestic product or GDP, the calculation involve the summation of consumption, investment, government spending and net Exports or in other words

GDP = C+I+G+NX

When you understand GDP is more for United States than China, there is still a possibility for investment in China being greater than that of United States because investment is just one component of the GDP. Where the summation of consumption, government spending and net exports for United States will be much higher than that of China so that even though if China has high investment, United States will have more GDP

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