Wealth & Inequality in the U.S. and China (2024)

FAQs

Wealth & Inequality in the U.S. and China? ›

The Gini coefficient, one of the most widely used metrics of inequality, shows that in 2019 the United States (0.481) and China (0.465) both still have highly unequal income distributions in absolute terms and relative to other countries.

The share of personal wealth of the top 1% of China's population is about five times higher than the wealth held by the bottom 50%. Two policies explain these trends. First, fiscal policy has redistributed income between the state, urban and rural household sectors.

Income and wealth inequality is higher in the United States than in almost any other developed country, and it is rising. There are large wealth and income gaps across racial groups, which many experts attribute to the country's legacy of slavery and racist economic policies.

The United States, which is relatively more unequal than other developed economies, has consistently had a Gini coefficient below China's (see Figure 1). There have been multiple efforts to calculate China's Gini coefficient.

According to the annual report released by the World Inequality Lab last month, the bottom 50 per cent of Chinese adults earn about 25,520 yuan (US$4,000) a year, while the top 10 per cent of the population earns, on average, 14 times more at 370,210 yuan. The gap is bigger than in most developed economies.

A September 2017 study by the Federal Reserve reported that the top 1% owned 38.5% of the country's wealth in 2016. According to a June 2017 report by the Boston Consulting Group, around 70% of the nation's wealth will be in the hands of millionaires and billionaires by 2021.

As per projections by IMF for 2021, United States is leading by $6,033 bn or 1.36 times on an exchange rate basis. The economy of China is Int. $3,982 billion or 1.18x of the US on purchasing power parity basis. According to estimates by World Bank, China's gdp was approx 11% of the US in 1960, but in 2019 it is 67%.

What Causes Income Inequality? Income inequality is caused by a variety of factors, including historical racial segregation, governmental policies, a stagnating minimum wage, outsourcing, globalization, changes in technology, and the waning power of labor unions.

By 1970, the income share of the top 1 percent had fallen to 10.7 percent. But it has since risen gradually, and reached 19.1 percent by 2021, almost doubled in 50 years. A main cause for the widening income disparity is the huge pay gap.

Why is China's income inequality so high? ›

Urban-biased policies

More specifically, research published in the Journal of Economic Modelling demonstrates that the Hukou system and absence of a fully functioning land market are two main drivers of rural-urban inequality.

TOKYO/BEIJING -- China's net worth reached $120 trillion in 2020 to overtake the U.S.'s $89 trillion as a red-hot real estate market drove up property value, according to a report by McKinsey Global Institute.

While China and the US are comparable in nominal GDP, there are far more wealthy individuals in America than in China. China — with a population of 1.4 billion — has 780,000 people holding assets worth $1 million or more, while the US — with a population of 332 million — has 5.27 million people in the same category.

South Africa has the highest income inequality as measured by the Gini coefficient. Using this measure, a score of zero indicates no inequality, a score of 100 shows perfect inequality. South Africa has a GNI per capita of $12,938 according to 2021 data and adjusted for purchasing power parity.

Much of the increase in inequality in China can be attributed to the widening rural-urban divide, particularly the differentials in rural-urban income. A household survey conducted in 1995 showed that the rural-urban income gap accounted for 35% of the overall inequality in China.

Americans have the highest income inequality in the rich world and over the past 20–30 years Americans have also experienced the greatest increase in income inequality among rich nations.

The United States has the greatest income disparity among developed nations. However, the inequality indicators vary considerably from state to state.

The U.S. currently has the largest economy in the world by far with $23 trillion in 2021 GDP, according to the World Bank's data, while China has the second-largest GDP at $18 trillion and India the sixth-largest at $3 trillion.

Does China owe the US money? ›

As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).

It is necessary to ensure that the momentum of development is sufficient and powerful. It has become a global expectation that China's total economic size will surpass that of the US in the next decade or so, and as long as China focuses on developing itself well, this result will be achieved naturally.

One of the fundamental causes of health inequalities is the unequal distribution of wealth across the population. Wealth is the value of an individual or group's money and/or material assets that have built up over time.

Despite popular belief that income inequality largely reflects individual differences in talent and motivation, there are also significant structural and cultural causes, such as segmented labour markets, discrimination, institutionalized racism and sexism, gender roles, and family responsibilities.

Poverty and social discrimination are the main reasons for inequality. Poverty would lead to denial of access to the resources. Social discrimination based on caste and gender leads to treating people without any dignity.

The richest 1 percent grabbed nearly two-thirds of all new wealth worth $42 trillion created since 2020, almost twice as much money as the bottom 99 percent of the world's population, reveals a new Oxfam report today. During the past decade, the richest 1 percent had captured around half of all new wealth.

According to a recent study by personal finance website SmartAsset, an American family needed to earn $597,815 in 2021 to be in the top 1% nationally.

New York was the state with the greatest gap between rich and poor with a Gini coefficient score of 0.51 in 2021. Although not states, Puerto Rico and the District of Columbia had the highest Gini coefficients in the United States that year.

Economic. Less equal societies have less stable economies. High levels of income inequality are linked to economic instability, financial crisis, debt and inflation.

The average American worker earned some $58,120 a year, 3.5 times his or her Chinese counterpart — still wide but not what it was. And according to the independent consulting firm, eca International, preliminary data show that the wage gap continued to close in 2022 and will likely close further in 2023.

Who holds all the wealth in China? ›

And the richest 10 percent owned 62 percent of the total national wealth, while the richest 5 percent owned more than 50 percent. Notably, the top 1 percent in China possessed more than one third of the national net wealth. The 90/10 ratio tells a similar story about wealth inequality in China.

Since 2000, China implemented a series of pro-farmer policies as part of its balanced development strategy and measures to reduce urban–rural income gaps. These policies included various direct subsidies, the abolishment of the agricultural tax and improvement of public services and social protection.

To a reasonable level of accuracy there's no one in China in the bottom 10% of the world's population by wealth. And yet there's some 10% of those global poor in North America, and another 20% or so in Europe. So, yes, it really is true that there're more poor people in America (and Europe) than there are in China.

Because of its dominance in many areas of manufacturing, such as electronics, machinery, and textiles next to its staggering industrial output, China has edged closer to the crown of the richest country in the world by net worth.

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.

"America is richer than all other countries." This sentence is in the comparative degree. Here a comparison is made of America's wealth to that of other countries.

In the fourth quarter of 2022, 68.2 percent of the total wealth in the United States was owned by the top 10 percent of earners. In comparison, the lowest 50 percent of earners only owned three percent of the total wealth.

The top 10% of the population of the Middle East and Northern Africa, the two most unequal regions in the world, capture roughly 58% of the total national income; in Sub-Saharan Africa, that share amounts to 56% and in Latin America and South and South East Asia to 55%.

Income inequality in the United States

The U.S. also has the highest Gini coefficient among the G7 nations.

China has played an active role in poverty alleviation in the global community. Over the past 70 years, China has provided assistance to over 160 countries in Asia, Africa, Latin America, Oceania and Europe, and through global development initiatives like the Belt and Road Initiative.

Has China lifted millions out of poverty? ›

After four decades of policy implementations and effective governance, China declared itself successful in lifting 770 million of its citizens out of poverty.

The median salary in China is 26,800 Yuan (USD 3,855) per month. That means half of the population draws an average income less than the median salary. In contrast, the other half earns more than the median salary.

You need $12.4 million to be in the European country's richest 1%. In the US you need $5.1 million. It's $3.3 million in the UK, $1.6 million in the UAE, and $960,000 in mainland China.

BEIJING, April 1, 2022— Over the past 40 years, the number of people in China with incomes below $1.90 per day – the International Poverty Line as defined by the World Bank to track global extreme poverty– has fallen by close to 800 million.

The average American worker earned some $58,120 a year, 3.5 times his or her Chinese counterpart — still wide but not what it was. And according to the independent consulting firm, eca International, preliminary data show that the wage gap continued to close in 2022 and will likely close further in 2023.

Americans have the highest income inequality in the rich world and over the past 20–30 years Americans have also experienced the greatest increase in income inequality among rich nations.

The United States has the greatest income disparity among developed nations. However, the inequality indicators vary considerably from state to state.

Income inequality in the U.S. is the highest of all the G7 nations, according to data from the Organization for Economic Cooperation and Development.

China's current mainly market economy features a high degree of income inequality. According to the Asian Development Bank Institute, “before China implemented reform and opening-up policies in 1978, its income distribution pattern was characterized as egalitarian in all aspects.”

We argue that China's current high income inequality is significantly driven by structural factors attributable to the Chinese political system, the main structural determinants being the rural-urban divide and the regional variation in economic well-being.

Is China a low income country? ›

The World Bank defines a high-income nation as one with a nominal gross national income (GNI) per capita above $13,205. China logged in at $12,608 last year, the National Bureau of Statistics reported.

There are 37.9 million Americans living in poverty, accounting for 11.6% of the total population, according to the U.S. Census Bureau.

The US poverty standard is 15 times higher than the Chinese counterpart. While in term of per capita GDP, the US is 10 times higher than the Chinese counterpart. Let's take a look at the food price. In the US, the price of pork is half that of the Chinese counterpart.

The U.S. makes up 23.93% of the total global economy, says Investopedia. The World Bank Group lists China as the second richest country in the world as of 2021, possessing a GDP of $17.734 trillion along with a GDP per capita of $12,556.3. China makes up 18.45% of the total global economy.

This might be surprising since China is currently the second largest economy in the world and is poised to overtake the size of the US economy by 2050. However, measuring the Chinese economy solely in terms of GDP is misleading because it obscures China's severe intra-country inequality.

The growth of the U.S. trade deficit with China between 2001 and 2018 was responsible for the loss of 3.7 million U.S. jobs, including 1.7 million jobs lost since 2008 (the first full year of the Great Recession, which technically began at the end of 2007).