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Economics

Las dos caras del PIB chino

Apr 30, 2021 Nancy Qian

CHICAGO – Los informes económicos sobre China se centran demasiado en el PIB total y no lo suficiente en el PIB per capita, que es el indicador más revelador. Y esta cobertura sesgada tiene importantes implicancias, porque los dos indicadores pintan paisajes considerablemente diferentes de la situación económica y política actual de China. También centran nuestra atención en diferentes cuestiones.

Una búsqueda rápida en todos los medios de noticias en inglés en la base de datos ProQuest para el período de diez años de 2011-21 demuestra que 20.915 artículos discutían el PIB de China, mientras que sólo 1.163 mencionaban su PIB per capita. La diferencia era proporcionalmente mayor, inclusive, entre las ocho publicaciones más grandes y más elitistas, entre ellas el New York Times, el Wall Street Journal y el Washington Post, donde 5.963 artículos se referían al PIB chino y sólo 305 analizaban la medida per capita.

En 2019, el PIB de China de 14 billones de dólares(medido a tipos de cambio de mercado)

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0 Comments on this paragraph, 30 Comments on this article

Lawrence Michael May 11, 2021

Thank you for bringing this forth. Given that EA parameters for both growth viz sustainability via demographics is a constant war of attrition that every country battles while most countries get significant cuts in their figures viz EA parameters and which remain carefully shorn of fancy myopic economic jargons geared to firefighting as some norm! A tragic irony because planning is all about the obverse of such eventualities.
In effect most popular economic prisms that filter a particular realm of human activity, that has a huge range in reality, come across as whitewashing or what some term a green washing exercise to cater to particular cartels. Or politely concede the world to the crime-terror cartels. While taxing their populace to sustain those while herding them to a certain death & destruction in the strategic sense.
"Shudraism" is another word to capture this process towards this eventual death via HIV virus that the uncivil realms present, with Islamic ones merely the more visible of the disease spreaders.
Now imagine using the EA parameters for filtering outcomes of current economic & other policies viz the obvious ones that EA parameters present one with?
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Niklas Monrad May 10, 2021

Saying that punitive measures "are unlikely to achieve their intended aims" is incorrect. It is correct that inflicting economic pain on a rouge or hostile state does not necessarily cause that state to immediately collapse or change its attitudes, but it does diminish that state's ability to inflict damage abroad, and it does force that state to increase its resources on internal problems. After all, the Soviet Union did collapse, most likely due to multiple factors, but pressuring the state to spend resources on weaponry to keep up with the US while its infrastructure suffered greatly surely did contribute to the country's fall in the longer term.

In the same vein; helping Communist China strengthen its economy for decades by allowing it into the WTO without strongly enforcing the rules that come with admission and without sufficiently punishing China for its various misdeeds has now brought the West in a situation where battling China on both economic as well as diplomatic fronts is far more costly that it would otherwise have been. We fed the monster that we are now facing.
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Niklas Monrad May 10, 2021

Saying that "Many Chinese think the West is seeking to reassert political dominance and feel painful reminders of colonialism and World War II" is equal to saying "many Americans think the 2020 election was fraudulent and stolen from Trump". These Chinese and American people "think" so, because their leaders have been filling them with propaganda and lies, but that does not make them facts.
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Rajiv Chopra May 10, 2021

I lived in China for almost 6 years. There is a great disparity within the big cities, and between the cities and the rural areas.

But then, isn't the same true of my country - India? We are a poor country, admittedly. But, I lived in Singapore, and have also been to the USA - where there is a great disparity of income and lifestyle.

China has made great strides. More needs to be done
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Leo Arouet May 10, 2021

Great article. I agree with him, because already had these data.
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Peter Schaeffer May 9, 2021

Contrary to what the author claims, China is a middle-income country. Using GDP at current exchange rates is a hoax. PPP is a considerably better measure of actual output. Using PPP, China's per-capita GDP in 2019 was $16,117 (in 2010 dollars). To put this in perspective, Mexico's per-capita GDP in the same year was $19,796 (also in 2010 dollars). One real (no pun intended) is that China's savings rate is vastly higher than other countries. As a consequence, consumption is (in relative terms) depressed.
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Patrick O. Okigbo III May 9, 2021

While the CCP seeks to achieve more dominance and respect amongst t(EP comity of nations, the people seek to ascend the prosperity ladder. These two goals are on a collision course. It would be interesting to see how the party navigates these goals without having to open up and create more inclusive institutions.
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Jose Oyola May 9, 2021

Bottom line: China is a wealthy country, full of poor people who are easily manipulated by politicians. Welcome to global capitalism.

It’s going to get more challenging. We are in the midst of a new wave of disruptive AI technologies that will drive millions into poverty, create a cast of multimillionaires and increase GDP many times. Economists will watch in amazement as Gini coefficients drop to near zero levels.

We are watching a dramatic increase in wealth concentration, caused by algorithm applications that will be designed and applied by few hi-tech firms. Their owners and few talented “workers” are capturing the wealth that arises when blue collar workers in manufacturing and service industries are replaced by robots in production lines and warehouses, and better detection devices are used to drive trucks, monitor security. Plus robots that help surgeons perform complex medical procedures.

In this new world of disruptive technologies, governments who succeed in promoting AI algorithms AND reducing permanently their effect on poverty will be the global leaders.
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Fred Carstensen May 9, 2021

This is a useful reminder of how far China has yet to go--but it also feeds into American complacency about its own decline. America once led the world because of its public investment in human capital and infrastructure--which were the foundation of the dynamic private sector. China's leadership came to appreciate what once made America great--precisely those investments. So China built some the world's best infrastructure since 1982; America has let its infrastructure rot--and it now extracts more than $600 Billion annually from the American economy. And China restored its universities and began developing world-class research centers. The Economist did an analysis of critical technologies and found China near or even at the cutting edge in many. Meanwhile America has cut is public investments in research by two-thirds (now behind Slovenia at 28th in publicly-funded, university-based research) and seen its ranking in college graduation rate collapse from 1st to 20th in just 28 years. America has chosen to become a laggard; pointing out China's continuing comparative poverty ought not be used to mask America's decision to stop investing in itself and forfeit its leadership.
- Don B May 9, 2021
  
  But America continued to invest in human capital. It’s called Outsourcing and has made thousands of Chinese millionaires.
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- Peter Schaeffer May 9, 2021
  
  This is so poor. K-12 education spending has soared by all measures since 1960 (in the USA). Of course, results haven't.
  - Fred Carstensen May 9, 2021
    
    You are quite right--we spend a lot on K-16/20 education and don't get much for it. Teaching as a profession has declined and unlike many other countries where the best and brightest aspire to be teachers, here we tend to get weaker students. And of course often our K-12 teachers didn't major in the subject they teach, so it is inherently textbook centric and can lack depth.
    
    It is also the case that we have long been especially weak in math and science. Other countries have carefully articulated progressive curricular designs, typically covering sequentially only a few topics in real depth. In contrast, our maths curriculum often spends two days on a topic and tries to cover far too many topics.
    
    Add to this our short school year and short school day. We just aren't very serious about education it seems, despite its importance.
    - Peter Schaeffer May 9, 2021
      
      The real problems are a lot deeper than 'poor schools', 'poor teachers, and/or 'poor curricula'. Take a look at Caplan and Choy "The Boat People and achievement in America: A study of family life, hard work, and cultural values". In the very same schools (with the same teachers, etc.) where black and brown students were (are) failing, the children of the Boat People did exceeding well.
      
      See also the writings of Tino Sanandaji. years. Of course, since the truth isn't PC, his work isn't that well know. See "The amazing truth about PISA scores: USA beats Western Europe, ties with Asia." (tino.us). Quote
      
      "What I have learned recently and want to share with you is that once we correct (even crudely) for demography in the 2009 PISA scores, American students outperform Western Europe by significant margins and tie with Asian students. Jump to the graphs if you don’t want to read my boring set-up and methodology."
      - Fred Carstensen May 10, 2021
        
        OK. I am well aware of the tremendous differentials in outcomes. And KIPP schools produce great outcomes regardless of ethnicity or SES; same is true of the military schools. Same is true of some of the small public high schools in NYC (my daughter was cofounder of one of those--it had an SES well below the average for the city but had 93% graduation rate and very high matriculation to higher ed--one of the top dozen schools in the whole system--but had a special curriculum and not subject to the Regents exams). But we are failing. Individual successes don't change the overall picture.
        
        And it gets much worse when we look at STEM graduates--we are near the bottom there. India has four times as many; China six. We as a society have CHOSEN to give up on ourselves in a collective sense as we double down on "individualism." See Andersen's Evil Geniuses.
        
        Peter Schaeffer May 10, 2021
        
        Sadly, KIPP is part of the (more productive) past. KIPP has dropped it famous ‘Work Hard, Be Nice’ slogan. These days promoting achievement is supposedly 'racist' and bad.
        
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Steve Gokorsch May 9, 2021

Having visited China I feel sorry for their citizens. Seeing all the high rise apartment buildings and block after block of the older low rise apartments to me it appears to be similar to an anthill with all the worker ants running in and out. Their new highways and bridges are wonders but their living conditions piled on top of one another are sad.

Maybe the Chinese do not really prioritize green space. Maybe like those who live in cities like New York they like living on top of one another.

My opinion is of course biased by where and how I grew up. Living in the Mid-west US I've always has a yard and garden...even when I lived in the city.
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Chandrashekar Tamirisa May 9, 2021

Per capita GDP convergence between industrialized countries and China, within the current paradigm of economic growth, would naturally be the objective of China. An oft cited example of the inadequacy of the per capita measure is to imagine a two person economy: Jack Ma and a Chinese farmer. The per capita GDP would be very high but it does not say anything about income distribution as this article quite correctly implies. Redistribution of income is needed in China to alleviate poverty, not higher over all GDP. China is a wealthy country. Not poor.
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B Wilds May 5, 2021

China's strength must be questioned by people without an agenda if we truly wish to understand the world. It could be argued that only gargantuan credit injections have prevented a total economic collapse in the world's second-largest economy and only ever greater credit injections are keeping China alive. This underlines the fact that size should never be interpreted as strength. More on this below.

https://brucewilds.blogspot.com/2021/03/chinas-strength-should-be-evaluated.html
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j. von Hettlingen May 3, 2021

Nancy Qian says media coverage of China’s economy “focuses far too much on total GDP and not enough on per capita GDP, which is the more revealing indicator.” Given its population size of nearly 1.4 billion, and a total GDP of $14 trillion ‎(2019), China is still a “poor” country, despite phenomenal growth since Deng Xiaoping’s economic reform in the late 1970s. China’s per capita GDP was $8.242 in 2019, which is 620% above its all time low of $132 in 1962.
According to the author, the “skewed coverage has important implications, because the two indicators paint significantly different pictures of China’s current economic and political situation. They also focus our attention on different issues.” Critics say, Beijing needs to address a number of broadly used measures of the quantity and quality of life, as well as transparency to make the “Great Leap Forward” to the status of a developed country.
Although millions had been lifted out of poverty, “there are still hundreds of millions of impoverished Chinese” around. To understand the extent of poverty, one needs “to consider the degree of inequality across its large population. China’s current level of income inequality (measured by the Gini coefficient) is similar to that found in the US and India. Given that 1.4 billion people live in China, the country’s inequality implies” that it still has a lot of homework to do.
Apparently, “the government has said that 600 million people have a monthly income of barely CN¥1,000 ($155), equivalent to an annual income of $1,860. Of these people, 75.6% live in rural areas.” A few years ago, in a push to eradicate poverty, Xi Jinping sought to urbanise the rural population. The greatest migration in human history unfolded, with a mass exodus of hundreds of millions of rural Chinese pouring into the fast-growing cities.
Migrant workers who moved from villages to urban areas earned more, but they actually ended up less happy than the people they left behind. A few years later, in order to narrow the gap between the urban rich and rural poor, Xi is trying to repopulate rural towns with entrepreneurs and consumers, persuading rural-born people that small towns can offer just as much opportunity as major cities. China’s new philosophy is to bring jobs to the people, rather than the other way round.
The author says, the leadership is “aware that it must do so in order to maintain popular support,” and it will be “preoccupied for at least another generation by the need to increase domestic incomes.” Even if it does not come to pass, “governments can also bolster their popular support in ways that do not foster economic growth.” Xi had tightened his grip on power, emphasizing China’s “role in defending the population against external or impersonal forces, such as earthquakes or the COVID-19 pandemic.”
The most effective tool is to whip up nationalist sentiments, adopting “an assertive stance regarding territorial disputes in the South China Sea and along the Chinese-Indian border.” Beijing’s aggression had elicited response from the West “in a variety of ways. The US is ramping up its military presence in the South China Sea, while China also faces the threat of economic sanctions and a boycott of the 2022 Beijing Winter Olympics” due to human rights abuses against the Uighurs and other ethnic minorities in Xinjiang.
Although history shows that “sanctions, boycotts, and military pressure” have not always achieved “their intended aims,” China is aware of its global image problem. It has spent billions on efforts to project its soft power, deploying cyber trolls to boost its reputation as a responsible world leader. It is true that “military aggression often provokes a political backlash in the targeted country and strengthens support for its government.” In countries like Iran, economic sanctions have been capitalised to “solidify public opinion behind more hardline policies.”
The author sheds light on how many Chinese see the West’s tough stance against China as a means “to reassert political dominance and feel painful reminders of colonialism and World War II, when China lost 20 million people, more than any country except the Soviet Union. The strong emotions triggered by Western policies toward China overshadow the fact that some of China’s actions are troubling countries like India, Vietnam, and Indonesia, which also suffered brutal colonial policies.”
No doubt ordinary Chinese should not bear the brunt of their leaders’ outrageous behaviour, which often seeks to “distract attention from important domestic issues, not least the need to boost incomes.” Most of China’s poor “probably care little about border disputes or international sporting events.” The hundreds of millions people “just want to stop being poor.” This is not a justification for their apolitical stance, because it does not prevent them from endorsing the regime’s hubris in domestic and foreign policies.
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Mirek Fatyga May 2, 2021

the idea that China is the unstoppable power that will be developing indefinitely until living standards there reach western levels ignores world resource constraints and the demographics of China. It is likely that the apparatchiks understand this which is why the CCP is cracking down on any whisper of dissent.

You cannot understand the world until you consider the consequences of the XXth Century population growth. They are dire. Perhaps not insurmountable, but dire nonetheless. The developed countries face relentless downward pressure on their living standards while developing countries face an invisible ceiling on their development, that no political manipulation can easily overcome. Fiscal manipulation simply feeds the next financial crisis.
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David Lentz May 2, 2021

Unfortunately such articles seem to always start from an adversarial viewpoint. With inherent assumptions that are not revealed fully. I suppose the assumption is USA must dominate everyone else and if they cannot it will be a form of death for Americans. It’s all a mystery to me. Feel the fear. It’s a horrible way to live.
Is that why suicide rates among the young in America is skyrocketing? With American history there is no such thing as friendship only dominance. America hates France because France refuses American troops on its soil. Germany and Japan are pitiful lapdogs of the Americans. They were once powerful nations but now are literally dying off because they no longer even make babies anymore. Because they are pitiful and in their hearts they know it. South Korea is similar with many people getting cosmetic surgery. All pitiful lapdogs of the idiotic Americans who do nothing about climate change and contribute nothing to the world for future generations
Social media is useless crap. Americans are purveyors of sugar and tobacco
Worthless
- Paul Friesen May 2, 2021
  
  I think you are right in a way, but I also think you are too hard on Americans. As far as I am concerned, Americans are just people like everybody else, just as Chinese are people like everybody else. We need to understand the differences between countries as people who are, in mass, on average, the same, but in circumstances that are different.
  
  The biggest way in which circumstances between countries are different is that different countries have different amounts of industry and other such economic activities. This is due largely to the tendency of economic activity to cluster together. Poor countries are just the ones that got left out as the clusters formed. The people in them are really no different.
  
  Americans are just people in a country with lots of clustered activities, and which has been that way for a long time. It has also, for a long time, been the most populous industrialized country. This has allowed it to become very dominant. It is not hard to understand how this could cause Americans to become rather arrogant and believe that their good fortune is due to something special about them. That's not because they are naturally more arrogant than anybody else. It's just an effect of their circumstances.
  
  Things are now changing. As China's industrial centres grow, it is rapidly converging with previously-industrialized countries in per capita GDP. Logically, its huge population will cause it to dominate other countries, including the U.S. I can understand that the loss of dominance which is already well underway, but by no means complete, could cause some anguish for Americans. I just hope that they can accept it without starting a war.
  - David Lentz May 2, 2021
    
    As the sociologist Karl Polanyi wrote America was a result of free land and that ended in the early 1900s. He said going forward internal pressures from its own population would grow. I used to think the American elite and government were the root cause of the foreign evil but find most Americans are really the issue. But other countries play a role too by allowing the American printing press to pay out for their Mercedes and Toyota’s and Hyundai’s etc. it’s not just Americans to blame. Other nations are complicit and will be punished by climate change for that
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Godfree Roberts May 1, 2021

"In 2019, China’s GDP (measured at market exchange rates) of $14 trillion"?? No responsible international body compares economies based on nominal ('in name only') values. China's PPP economy is $25 trillion and America's is $20 trillion–as even the CIA World Factbook avers.

"China’s current level of income inequality (measured by the Gini coefficient) is similar to that found in the US and India"??

Similar, but also quite different because 99% of poor Chinese own their homes free and clear. That's why Wealth Gini indices look like this:
China 0.547
France 0.730
USA 0.801

The latest World Bank Income Gini figures put the US at 41.8% rising, while China's is 38.1% and falling.

More significantly, Xi plans to bring Chinese Gini below Finland's current 27.2 by 2035.
- Peter Schaeffer May 10, 2021
  
  Mr. Roberts, Some of your numbers are a bit off. However, you are a lot closer to facts than the author of this article. It is appalling that PS would publish stuff like this. However, I have found that American (I am from the USA) elites can't handle the rise of China. This comment is distinctly non-partisan. Delusions about China are commonplace on the left and right.
  - Godfree Roberts May 11, 2021
    
    Agreed. We have sustained our delusions for so long that we will be rendered irrelevant by the real China by 2025.
    - Peter Schaeffer May 11, 2021
      
      Mr. Roberts, Based on the numbers you are correct. However, the world doesn't always behave in rational manner. US GDP passed the UK in the 1870s. US GDP was 70% greater than the UK in 1900, and 130% greater in 1913. However, the UK and not the USA, was the dominant world power until the 1920s (perhaps the 1940s).
      
      My guess is that China will be recognized as the dominant power of the world by 2050. By then China's GDP will (probably) dwarf the USA. However, as the US/UK example shows, global power does not exactly follow GDP.
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Paul Friesen Apr 30, 2021

You are right, of course, although the other thing to remember about China's GDP is its rate of growth. That will, I am sure, lead to it converging in per capita GDP with previously industrialized countries, like Japan. When that happens, total GDP will be the highest in the world, and China will be the most powerful country in the world.

Much current "western" effort is focused on preventing that, but this is neither fair nor likely to be successful. Chinese people have the same right to a good standard of living as anyone else. The U.S., in particular, needs to stop trying to maintain its dominance. It will not succeed, but could do a lot of damage trying, including starting a war. The U.S. needs to focus on providing a good life for its people, like many other countries that are successful without dominating the world.
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