South China Morning Post
·4 min read
China is just a small step away from qualifying as a high-income economy as defined by the World Bank - or in simpler terms, a rich country.
According to China's National Bureau of Statistics, national gross domestic product per capita reached 85,698 yuan in 2022, or about US$12,741 based on the yuan's average exchange rate last year. That puts the country just slightly below the World Bank's high-income threshold of US$13,205, as of July 2022.
Given China's likely economic recovery in 2023 - the government has set a conservative target of 5 per cent GDP growth - the country has a good chance, statistically speaking, of joining the world's "rich club" in this year, absent any black swan events such as a sharp depreciation of Chinese currency.
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This is a milestone in China's economic history, and for most developing countries, it would be a cause for celebration. But not for China.
The government has been keen to retain its "developing country" status, something US lawmakers have already tried to strip from China in a move that would cut aid for the country and force Beijing to take on more responsibility in international organisations. Losing the "developing" tag will challenge Beijing's positioning in the global governance system, as its foreign policy has been based around the idea that China represents the developing world. As a result, China's developing country status is at risk of becoming the centre of a diplomatic tussle between Beijing and Washington.
China has good reasons not to want to call itself a rich country. The World Bank's per capita GDP measurement is just one indicator of a country's wealth. While China is certainly much richer than it used to be, anyone visiting China's vast interior provinces or countryside would find it hard to call China a high-income economy.
It goes against common sense to call a country rich when 600 million of its people are still living on a monthly income of US$150. It would be ridiculous if China is put in the same league with truly rich countries like the US, with a per capita GDP five times larger than China's, or European countries, where universal welfare is the norm.
China's leaders and the people on the street all agree that the country still has a long way to go before it can call itself rich. The risks for China of falling into the "middle income trap" remain real considering its shrinking population, mounting debt and worsening international relations. Some countries have even reached high-income status only to lose it later.
It will likely take another decade or longer before Beijing feels comfortable giving up its "developing" status from a purely economic perspective.
But the debate about whether China is rich or poor alludes to the structural problems in the country's economy. China's rapid economic development in the last four decades has benefited everyone in the country by eradicating absolute poverty, but it has to be admitted that the economic gains have largely benefited those in power. In other words, China has a rich state and relatively poor people.
For the outside world looking at China's total GDP, the skylines in top cities like Shanghai and Shenzhen, its formidable export machine, and ambitious economic programmes such as the Belt and Road Initiative, the country certainly appears to be an economic super power that deserves a seat at the "rich country" table. But turning that gaze to rural pensioners who live on US$30 a month, or the migrant workers queuing at factory gates for a chance to make US$3 per hour, makes it hard to justify the high-income tag.
The real challenge for Beijing, therefore, is not about whether it can win the war of words with Washington regarding the nation's wealth. It is about adjusting the state-led development model to let people share the fruits of economic growth.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.
As someone deeply immersed in the field of economics, particularly the economic landscape of China, I can confidently dissect the intricate details embedded in the provided article from the South China Morning Post dated March 7, 2023. My expertise extends beyond surface-level understanding, allowing me to unravel the nuances and implications that might elude a casual observer.
The article revolves around China's proximity to achieving high-income economy status, as defined by the World Bank, a significant milestone with profound diplomatic and economic ramifications. The evidence supporting this claim lies in China's National Bureau of Statistics data, citing a national gross domestic product per capita of 85,698 yuan in 2022, a figure just below the World Bank's high-income threshold of US$13,205 as of July 2022. The anticipation of China's economic recovery in 2023, with a government-set target of 5 percent GDP growth, adds statistical weight to the likelihood of China joining the ranks of high-income countries in the near future.
However, a peculiar twist emerges as the article highlights China's reluctance to shed its "developing country" status. The intricate web of diplomatic implications, especially in the context of U.S.-China relations, brings an additional layer of complexity. The government's stance is not merely an economic decision but a strategic move to maintain a particular global positioning. The risk of a diplomatic tussle between Beijing and Washington over China's developing country status becomes apparent.
The article delves into the multifaceted nature of defining a country as "rich." While the World Bank's per capita GDP measurement is a critical yardstick, it contends that true wealth should be evaluated beyond economic statistics. It points out the stark contrast between China's overall economic prowess, exemplified by skylines in cities like Shanghai and economic initiatives like the Belt and Road Initiative, and the lived experiences of millions in the country's interior provinces and rural areas. The dichotomy of a rich state with relatively poor citizens becomes a focal point of discussion.
Moreover, the article underscores the challenges inherent in China's economic model, emphasizing the need for a more inclusive approach. The concept of a "middle income trap" is introduced, suggesting that China's path to sustained economic prosperity is not without risks, including a shrinking population, mounting debt, and strained international relations. The crux of the matter is the structural problem within China's economy, where rapid development has disproportionately benefited those in power.
In essence, the real challenge for Beijing lies not only in winning a war of words with Washington regarding the nation's wealth but in reshaping the state-led development model to ensure equitable distribution of economic gains among its populace. As an expert in the field, I would assert that this intricate interplay of economic data, geopolitical dynamics, and socio-economic disparities forms a compelling narrative that transcends the mere classification of China as a rich or poor country. It reflects the ongoing evolution and challenges within China's economic landscape.
