While most US media claims China (PRC) has the world’s second largest economy, that is only true as measured in nominal terms. Measured in real PPP terms, Chinese GDP surpassed that of the US in 2015 and continees to move further ahead of it (and is likely to pass it in nominal terms very soon), despite gradual deceleration of the Chinese GDP growth rate. Furthermore, PRC seems to be taking global leadership in crucial 5G technology. In the last 70 years the PRC has gone from a poor nation wracked by regular famines to a solidly middle class nation with vastly reduced poverty and no famines for many decades (although there was an especially severe one in the late 1950s that killed millions in the early part of the regime).
I would like to put this anniversary into a broader historical perspective, in particular from a traditional Chinese view. That is that while there have been exceptional periods, most of Chinese history has been driven by dynasty cycles, with the average life of a dynasty being about 300 years, as with the Tang, Song, Yuan, Ming, ans Qing (the Han lasted 400 years, some others for much shorter periods). The classic pattern has been for the first century to be dynamic, with proper Mandarin civil service exams associated with a competent bureaucracy and effective management of the agro-hydraulic infrastructure, with a growing economy. The second century involves a flattening out and slowing of growth. In the third century corruption of the exams rises as does general corruption and stagnation as the incompetent bureaucracy mismanages the infrastructure and the broader economy, with all this leading to the Malthusian disasters of war, famine, and pestilence, and the eventual collapse of the dynasty.
A friend of mine refers to it as “The Communist Dynasty.”
How is China a “solidly middle class nation”? Further, they have taken great steps to removing extreme poverty. Somehow I don’t give a lot of credit for taking people’s income above $1.90 a day.
The question mark hanging over China’s 400 million-strong middle class. This is a pretty good newspaper. South China Morning Post
Hi Barkley:
China economy post or a post on Chinese influence in other countries such as Africa, etc.?
https://www.gapminder.org/tools/#$state$time$value=1965;;&chart-type=bubbles
The gapminder tools are pretty interesting on china. Take this one, life expectancy vs income and scrub back and forth with the handle below the chart. China’s path over the past 100 years is a really odd one. Life expectancy going up before income way outside the normal path big gyrations in life expectancy.
EMichael,
IMF has 78 categories of real PPP per capital income in US $: 2000>, 2000-5000, 5000-10,000, 10000-20,000, 20,000-35,000, 35,000-50,000, 50,000<.
In 2018 the number for PRC wa $18,110, near the top of the middle of those groups, with average world PP per cap income at $16,771, a bit lower than the Chinese level.
So, PRC is a middle income nation, even though it has a lot of inequality and still large numbers of poor people, although none of them starving as in the not too distant past.
Barkley,
From Run’s link:
“Estimates of the size of China’s middle class vary, depending on the definition. China’s statistics agency puts the figure at nearly 400 million, less than a third of the population, by defining a middle-class household as one making 25,000 yuan (US$3,640) to 250,000 (US$36,400) yuan a year – a fairly low threshold. But in a 2015 report, investment banking company UBS and PricewaterhouseCoopers narrowed it to 109 million Chinese with wealth of between US$50,000 and US$500,000 – a relatively high standard.
Whatever the measure, it is clear that China’s middle class is large in absolute terms but still relatively small as a share of China’s 1.4 billion people. In comparison, more than half the US population is considered middle class, while in South Korea it is two-thirds.”
I am not saying that China has not had an amazing turnaround, but I think it is often overstated, particularly when numbers are given by the Chinese.
Also, I think it is kind of silly to compare the size of the Chinese economy with anyone’s. 1.5 billion times anything is an awful big number. I believe in my discussions with Anne at EV I had found a GDP per capita in PPP dollars paper. China is around 1/4 of the US and other OECD countries in that measurement.
I’ll see if I can find it later.
EM:
Follow the other links in that article (light blue) and you will find other info. South China news is not the WSJ. It is reputable.
What a coincidence, I was in Beijing 2 weeks ago. I’m no China expert, but I did observe a few things there
– They are a police state. They keep it pretty subtle, but it’s there, always, in the background.
– Do not underestimate them. They’re not as prosperous as Korea or Japan, but they have a sizeable middle class and by PPP (stuff outside the tourist areas is really inexpensive) they are a legit middle class.
– They regularly do stuff with urban planning and infrastructure that isn’t even being attempted in the US. They are building for the future, not whining about how expensive things are
– I never got a good feeling for whether the police state aspects really bother people or not, because I didn’t want to get anyone there in trouble by pressing them on political issues. They certainly didn’t seem suppressed on a day to day basis, my impression is that as long as you don’t discuss politics you can do pretty much whatever you want.
They have big plans and the ability to execute them. If we don’t get our politics in order, and elect non-idiots, they will eat our lunch.