Markets
Chart: Is U.S. or China the World’s Economic Superpower?
Is U.S. or China the World’s Economic Superpower?
Popular opinion changes depending on where you live
The Chart of the Week is a weekly Visual Capitalist feature on Fridays.
Since the collapse of the Berlin Wall in 1989, the world has had one undisputed economic superpower: the United States.
But while the U.S. has enjoyed its moment in the sun, the balance of power has been slowly shifting towards the inevitable rise of China. It’s been a long time coming, but China now has the manpower, influence, and economic might to compete at a similar level – and if you ask people around the world, they’ve certainly taken notice.
Economic Superpowers
The United States and China combine for 39% of global GDP, 53% of estimated economic growth in the coming years, and 23% of the world’s population.
But which one is perceived as the more dominant economic power?
According to a recent survey by Pew Research Center, the vary wildly depending on the people and country surveyed. However, on an aggregate level that uses the results from the people in 38 countries surveyed, Pew determined that a median of 42% of people list the United States as the world’s leading economic power, while 32% name China as top dog.
Which one of the following do you think is the world’s leading economic power?
| Rank | Country | Global median (%) |
|---|---|---|
| #1 | United States | 42% |
| #2 | China | 32% |
| #3 | Countries of the EU | 9% |
| #4 | Japan | 7% |
| #5 | Other / None | 10% |
While the U.S. maintains a narrow lead in aggregate, things get much more interesting when we look at individual countries.
Different Perspectives
Do America’s closest allies view it as the clear global superpower? What about the countries that neighbor China – surely, they must witness China’s economic might firsthand.
Weirdly, the dominant perspectives in these places are not as obvious as one would think.
More people living in Canada, Australia, and major European countries like France, Germany, Sweden, Spain, and the United Kingdom tend to view China as the global economic superpower.
Meanwhile, the majority of people in South American and African countries see the United States as the world’s major economic power – and people in countries near China (such as South Korea, Japan, Philippines, Indonesia, and Vietnam) all tend to agree with that sentiment as well.
Markets
The European Stock Market: Attractive Valuations Offer Opportunities
On average, the European stock market has valuations that are nearly 50% lower than U.S. valuations. But how can you access the market?
European Stock Market: Attractive Valuations Offer Opportunities
Europe is known for some established brands, from L’Oréal to Louis Vuitton. However, the European stock market offers additional opportunities that may be lesser known.
The above infographic, sponsored by STOXX, outlines why investors may want to consider European stocks.
Attractive Valuations
Compared to most North American and Asian markets, European stocks offer lower or comparable valuations.
| Index | Price-to-Earnings Ratio | Price-to-Book Ratio |
|---|---|---|
| EURO STOXX 50 | 14.9 | 2.2 |
| STOXX Europe 600 | 14.4 | 2 |
| U.S. | 25.9 | 4.7 |
| Canada | 16.1 | 1.8 |
| Japan | 15.4 | 1.6 |
| Asia Pacific ex. China | 17.1 | 1.8 |
Data as of February 29, 2024. See graphic for full index names. Ratios based on trailing 12 month financials. The price to earnings ratio excludes companies with negative earnings.
On average, European valuations are nearly 50% lower than U.S. valuations, potentially offering an affordable entry point for investors.
Research also shows that lower price ratios have historically led to higher long-term returns.
Market Movements Not Closely Connected
Over the last decade, the European stock market had low-to-moderate correlation with North American and Asian equities.
The below chart shows correlations from February 2014 to February 2024. A value closer to zero indicates low correlation, while a value of one would indicate that two regions are moving in perfect unison.
| EURO STOXX 50 | STOXX EUROPE 600 | U.S. | Canada | Japan | Asia Pacific ex. China |
|
|---|---|---|---|---|---|---|
| EURO STOXX 50 | 1.00 | 0.97 | 0.55 | 0.67 | 0.24 | 0.43 |
| STOXX EUROPE 600 | 1.00 | 0.56 | 0.71 | 0.28 | 0.48 | |
| U.S. | 1.00 | 0.73 | 0.12 | 0.25 | ||
| Canada | 1.00 | 0.22 | 0.40 | |||
| Japan | 1.00 | 0.88 | ||||
| Asia Pacific ex. China | 1.00 |
Data is based on daily USD returns.
European equities had relatively independent market movements from North American and Asian markets. One contributing factor could be the differing sector weights in each market. For instance, technology makes up a quarter of the U.S. market, but health care and industrials dominate the broader European market.
Ultimately, European equities can enhance portfolio diversification and have the potential to mitigate risk for investors.
Tracking the Market
For investors interested in European equities, STOXX offers a variety of flagship indices:
| Index | Description | Market Cap |
|---|---|---|
| STOXX Europe 600 | Pan-regional, broad market | €10.5T |
| STOXX Developed Europe | Pan-regional, broad-market | €9.9T |
| STOXX Europe 600 ESG-X | Pan-regional, broad market, sustainability focus | €9.7T |
| STOXX Europe 50 | Pan-regional, blue-chip | €5.1T |
| EURO STOXX 50 | Eurozone, blue-chip | €3.5T |
Data is as of February 29, 2024. Market cap is free float, which represents the shares that are readily available for public trading on stock exchanges.
The EURO STOXX 50 tracks the Eurozone’s biggest and most traded companies. It also underlies one of the world’s largest ranges of ETFs and mutual funds. As of November 2023, there were €27.3 billion in ETFs and €23.5B in mutual fund assets under management tracking the index.
“For the past 25 years, the EURO STOXX 50 has served as an accurate, reliable and tradable representation of the Eurozone equity market.”
— Axel Lomholt, General Manager at STOXX
Partnering with STOXX to Track the European Stock Market
Are you interested in European equities? STOXX can be a valuable partner:
- Comprehensive, liquid and investable ecosystem
- European heritage, global reach
- Highly sophisticated customization capabilities
- Open architecture approach to using data
- Close partnerships with clients
- Part of ISS STOXX and Deutsche Börse Group
With a full suite of indices, STOXX can help you benchmark against the European stock market.
Learn how STOXX’s European indices offer liquid and effective market access.
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