

Per-Capita, the U.S. is a Century Ahead of China - cwan
http://mjperry.blogspot.com/2012/03/on-per-capita-basis-us-is-century-ahead.html

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w1ntermute
The statement in the title is rather disingenuous. There have been quite a few
countries in the past few decades that have achieved much higher rates of
growth than the US did. For example, South Korea started out after the Korean
War so poor that Ethiopia(!) sent it aid. Now, they are a highly developed
nation and their GDP per capita is on par with southern European countries,
such as Italy, and will probably surpass them very soon.

Now, the obvious argument against China imitating the growth of a country like
SK is that SK is small enough that it was able to grow at a phenomenal rate by
focusing on exports, whereas China's size inherently precludes it from that
particular luxury. However, many other things, particularly in terms of
technology, have changed since the last "big" country (the US) became
industrialized. It just may be possible for China to achieve organic growth at
much higher levels than the US enjoyed during the 20th century.

~~~
Estragon
I attended a talk recently by Justin Yifu Lin, the current chief economist of
the World Bank. On the basis of a comparison of China's current Purchasing
Power Parity to that of earlier Asian tigers, he argued that China's economy
is likely to grow at a rate of 8% p.a. for the next two decades.

He also argued that Africa will move into the cheap manufacturing jobs that
are now becoming more expensive in the China. Not sure how that squares with
his projected growth for the Chinese economy; presumably they will grow in the
"knowledge economies." They are certainly trying to... If that's the case,
knowledge workers in the West (which includes most readers of HN) may be in
for some serious economic disruption.

~~~
bane
"He also argued that Africa will move into the cheap manufacturing jobs that
are now becoming more expensive in the China."

To play a counterpoint, that will require various African nations to put into
effect a strong strategy for an export driven economy. While "Africa" has a
billion or so people, it's not a monolithic nation-state. Some countries with
better governance may go that route, others may not, and others may end up
with a continuous string of dictatorial regimes and corrupt governments and
accomplish nothing.

In 20 years, there may still be more poor Chinese peasants looking for cheap
factory work than available Africans looking for comparable factory work in
countries that have switched to an appropriate economic model. It's also not
entirely clear that the Asian export-driven model will work elsewhere.
[http://en.wikipedia.org/wiki/Export-
oriented_industrializati...](http://en.wikipedia.org/wiki/Export-
oriented_industrialization)

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laic
China and its economy are virtually in the hands of around 500 top families,
they are mostly senior communist officials or their descendants. They
controlled most of the resources and state-run enterprises which are all in
monopoly position in their own industry. 80% of the wealth generated
nationally are distributed among themselves, rather than giving back to
improve education, healthcare, social welfare.

It's not a growth model that is likely to maintain for long.

~~~
showerst
Actually, according GINI coefficient (going by the World Bank numbers), China
has about the same overall wealth inequality as the US:
[http://en.wikipedia.org/wiki/List_of_countries_by_income_equ...](http://en.wikipedia.org/wiki/List_of_countries_by_income_equality)
and is actually on par with such relatively well functioning countries as
Turkey and Singapore.

Of course this doesn't translate that well to on the ground conditions, and
their top 10% and top 20% share are still very high, but probably not high
enough to significantly impact growth. (Now if that cascades into political
problems, that's a different matter...)

Almost all long-term economic planning is in the hands of relatively few
government officials, but wealth appears to be reasonably well distributed for
a country _at their stage of development_. It's certainly not all in the hands
of a few thousand people, since the top 20% would be a few hundred million.

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usaar333
Incredibly disingenuous title. Yes, China has the same real gdp per capita
(PPP) that the US had in 1912. Except almost all of the United States' growth
had to come from technological advances - doing things that were not known in
1912. China has the luxury that it can merely leverage known technology,
allowing it to grow far more rapidly - It's infinitely easier to give all of
your farmers tractors after tractors have been invented.

Now don't get me wrong; it will still take China 40+ years to catch up to
where the US is today is on a per-capita basis, but it is hardly as far away
as the author makes it seem.

~~~
maratd
There is far more to growth than technology. You are taking some things for
granted. In 1912, the US already had a mature political and legal environment.
It had a healthy respect for property rights. You can't say the same of China
today.

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grandalf
By this logic, California is 50 years ahead of Alabama, and New York is 10
years ahead of California.

~~~
polshaw
This brings to mind an interesting point- economic migration. An Alabaman(?)
wanting to set up a start up is likely to move to california or new york-
suppressing the GDP of Alabama and increasing it for CA/NY. The same migration
applies to the already-rich.

Similarly, on an international scale, the USA is likely to be the destination
of choice today. So as we see China begin to surpass the USA economically, the
effect of any change of 'preferred economic migration destination' will likely
amplify the natural GDP changes.

~~~
grandalf
Yes! George Friedman (of recent Stratfor infamy) argues that within 50 years
the US will face a drastic shortage of workers and will set up immigration
recruitment programs.

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melling
Since there are about 1 billion more people in China than the US, what does it
mean when about 300 million Chinese have the majority of wealth in a 15-20
trillion dollar GDP economy?

~~~
endersshadow
It means that there are a ton of farmers in rural China that are barely
scraping by. It also means that there are a ton of factory workers in the
cities that are making very tiny wages.

The point of this article is that while the GDP may be comparable to the US
(to be fair, the GDP of China is actually less than half of the US [1]), the
situation in China is not really a first-world (to use an outdated Cold War
term) type of situation. There's a lot of poverty in China, and if the GDP per
capita were on par with the US, we'd be looking at a $45-50T economy. The
current China GDP is hovering below $7T at the moment, so they've got quite a
ways to go.

[1]:
[http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomin...](http://en.wikipedia.org/wiki/List_of_countries_by_GDP_\(nominal\))

~~~
w1ntermute
> It means that there are a ton of farmers in rural China that are barely
> scraping by.

Exactly. One has to keep in mind that in China, citizens are not free to move
about within the country as they please. The Hukou household registration
system[0] prevents, for example, rural migrants from legally taking up
residence in a more prosperous area, such as Beijing or Shanghai, without the
government's permission (which is quite difficult to get for a poor person).

This has effectively created 2 Chinas - an urban one and a rural one. And just
like we have here with Mexico and America, there are illegal immigrants from
rural areas who live in secret in the urban areas, often working under
inhumane conditions that they can't escape from without going to jail. The
children of those who are officially rural residents are not permitted to
enroll in urban schools, and thus forced to be separated from their parents
and return to the parents' hometown to receive a formal education.

0: <http://en.wikipedia.org/wiki/Hukou_system>

1:
[http://en.wikipedia.org/wiki/Hukou_system#Effect_on_rural_wo...](http://en.wikipedia.org/wiki/Hukou_system#Effect_on_rural_workers)

~~~
cellis
That is quite amazing to learn. How are the farmers not granted "citizenship"
as it were, in their own country once they move to another part of it and
presumably contribute to the local economy?

~~~
w1ntermute
The same thing was happening just 80 years ago in our own country:

> California was emphatically not the promised land of the migrants' dreams.
> Although the weather was comparatively balmy and farmers' fields were
> bountiful with produce, Californians also felt the effects of the
> Depression. Local and state infrastructures were already overburdened, and
> the steady stream of newly arriving migrants was more than the system could
> bear. _After struggling to make it to California, many found themselves
> turned away at its borders._

<http://memory.loc.gov/ammem/afctshtml/tsme.html>

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csomar
China and the U.S are in the same century (along with the rest of the world).
The comparison is just ridiculous. Take for example, Qatar. So Qatar a decade
ahead of the USA?

What you should compare on is the access to public (or private, who cares) to
health care, states services, education, job opportunity, security...

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cop359
The data on that graph looks bogus to me. I doubt they'd be able to assess per
capita GDP year to year so accurately for the years before 1900.

Take for example the Taiping Rebellion which was from 1850 to 1864. Described
by wikipedia: "About 20 million people died, mainly civilians, in _one of the
deadliest military conflicts in history_."

Yet according to that graph is had little to no effect of the per capita GDP.

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twiceaday
Is this an apt comparison considering the monumental US debt?

~~~
SamReidHughes
You can measure the cost of the debt yourself by taking into account the cost
of interest payments. They're less than the tax rate.

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gojomo
Looking retrospectively and using language like 'century ahead' could lead one
to believe it would take China 100 years to reach US 2011 levels. But at 9%
compounded growth, that $8,400 becomes $50,000 in just 21 years.

Averages will also keep indicating that 'China' as whole is 'behind' the US
even after China contains within itself the equivalent of 1-2 entire United
States economies/income-distributions. (The averages will be dragged down
because China will contain another 2-3 larger poorer economies as well.) Not
so useful for understanding what's really happening.

------
shingen
Per capita GDP is one thing, a lot more important is per capita income. Those
are two very different things, particularly when you're talking about China -
a country with a billion extremely poor people, and a lot of mega corporations
that the state has blessed with near monopolies. What you want to know, is:
how much money are the people of China keeping out of that huge economy.

Per capita income in the US is closer to $40k, and in China it's closer to
$3,600 to $4k. In 1990, it was closer to $350 to $450 range (IMF).

The focus always goes to China's per capita GDP, but it's a very misleading
way to measure economic parity. People get upset about America's wealth
inequality - China's wealth inequality is several orders of magnitude worse.

~~~
rudiger
_People get upset about America's wealth inequality - China's wealth
inequality is several orders of magnitude worse._

Source? I'd like to see wealth (and income) inequality metrics for both
countries.

~~~
shingen
You mean a country with 100 billionaires, the second largest economy, and 500
million people (40%) living on less than $2 per day? 130x million people
living on $1 per day (both courtesy of the world bank)? 50% of the population
without indoor plumbing (cia factbook)?

Not hard to source the extremely dire statistics. They're plentiful.

<http://news.bbc.co.uk/2/hi/asia-pacific/8668086.stm>

[http://www.businessweek.com/magazine/content/11_06/b42140136...](http://www.businessweek.com/magazine/content/11_06/b4214013648109.htm)

