Analysis of Economic and Growth Synchronization Between China and the USA Using a Markov-Switching–VAR Model: A Trend and Cycle Approach

This study examines the synchronization of economic and growth cycles between China and the United States of America amid ongoing economic and geopolitical tensions. Using a Markov-Switching–Vector Autoregression (MS-VAR) model, the analysis applies the Hodrick–Prescott and Baxter–King filters to monthly data from January 2000 to December 2024, capturing trends and cyclical fluctuations. The findings reveal asymmetries in economic synchronization, with differences in recession and expansion durations influenced by trade disputes, financial integration, and external shocks. As the rivalry between the two nations intensifies, marked by trade wars, technological competition, and geopolitical conflicts, understanding their economic co-movement becomes crucial. This study contributes to the literature by providing empirical insights into their evolving interdependence and offers policy recommendations for mitigating asymmetric shocks and promoting global economic stability.