Economic Development in China and the United States: Linkages and Changes in Spillover Effects

This paper constructs a three-economy input-output model for China, the United States, and the rest of the world based on Global Input-Output Tables from 1997 to 2020, analyzing the medium- and long-term change characteristics of domestic multiplier effects, inter-country feedback effects, and spillover effects on the real output and output growth of China and the United States. The results show that domestic multiplier effects explain more than 80% of output growth in both countries, but inter-economy spillover effects have become a non-negligible influencing factor. The three types of effect coefficients indicate that China’s domestic industrial linkages and external connectivity are stronger than those of the United States. Additionally, China’s output growth relies more on changes in the three types of coefficients, while the United States depends more on changes in its own final goods production scale. Further analysis of spillover effects reveals that China’s spillover impact on the United States is increasing, while the U.S. spillover impact on China is decreasing, and the mutual spillover effects between China and the rest of the world are both strengthening. These characteristics are also evident across the eight primary industrial sectors. In the future, the risk of economic “decoupling” between China and the United States remains high, and strengthening economic ties between China and other global economies is a necessary path for China’s sustained and healthy economic development.