Why is China still poor in per capita terms despite having the second-largest economy in the world in terms of real GDP?

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China’s estimated GDP is over $14 trillion for the year 2019. According to the International Monetary Fund (IMF), this figure puts China in the second position for nominal GDP, behind the United States’s $21 trillion. This ostensibly strong economic position owes to a combination of factors that include the Great Leap Forward that took place in the previous century. This event refers to a series of political and cultural reforms aimed at modernizing China. Nevertheless, despite this large nominal GDP, the per capita GDP is estimated at about $10,400 in China. In comparison, the United States’s per capita GDP is around $64,900. It is worth remarking that the United States is only in the seventh position in terms of per capita GDP, falling behind notoriously wealthy European countries including Luxembourg, Norway, and Switzerland in positions one, two, and three respectively. By comparison, China is in the 57th position globally with respect to per capita GDP.

The simple and accurate explanation for the disparity is the definition of “per capita,” Latin for “per head.” This term measures the wealth per person residing in a given country. It assumes that the wealth is distributed evenly among the population, which it most certainly isn’t—in China or any other modern country. China’s population is about 1.4 billion people, while the US population is about 330 million. While this issue is explicable at first glance as a basic math problem, the picture is a bit more nuanced. China’s rural population, especially in western China, is severely impoverished compared to the urban coastal cities such as Shanghai. It deserves comment that the United States’s distribution of wealth is far from perfect. The term economists use to measure economic inequality is called the Gini coefficient. The countries with the most even distribution of wealth, as measured by this statistic, include Slovenia, Slovakia, and Sweden.
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