Per Capita GDP of China vs. the United States (Forecast using Japan)

July 26, 2021 - GDP, China

FAQ

1. Why does it matter if China catches up to the same GDP per capita as the United States?

China, even in 2021, is the largest economy by PPP and is the second-largest by GDP behind the United States. As of 2019, China also had 1.398 billion people compared to the United States, only having 328 million people. So if China reaches the same GDP per capita as the United States, it will be a far larger economy than any other economy in the world.

2. Is Japan a good guide for when China may reach the United States in terms of GDP per capita?

Japan gives some guidance as to what is possible. Japan had 92.5 million people in 1960, while the US had 180.7 million people. So the US was still almost twice as large as Japan. China is over 4x as large as the US currently. So they may face hurdles due to their size. However, their size is also a benefit. Companies worldwide will have a large incentive to obtain access to China's market by giving China the technology it needs to reach the US in terms of GDP per capita.

3. Why has Japan fallen so much in the past 25 years?

In terms of PPP per capita, Japan has continued to grow. In terms of GDP per capita, Japan has not. This disparity is due to the impact of exchange rate fluctuations.

4. Is PPP or GDP a better measure to use?

PPP is a good measure of how well off the people in a country are. However, GDP is good in terms of how much of an impact the country can make globally. For a country to buy or invest in another country, an exchange rate will have to be used.

Share of World GDP and Population - China and the United States

May 12, 2021 - China

FAQ

1. Why does China matter?

The United States has been the largest economy in the world for over 100 years. However, China has a much larger population. Since the late 1970s reforms, China has experienced rapid growth. It is now on track to be the largest economy in the world, and by some measures, it already is, such as Purchasing Power Parity. Not only could it become the largest, but it could also dwarf the United State's economy in size. It could even become larger than the economies of Europe and North America combined. However, China faces a population growth decline that should limit its relative size by 2100. So its potential dominance isn't as great as it currently seems.

2. Where is China's share of world GDP headed?

The per capita income of China is still far below the United States. So there is a lot of room for growth. However, the population advantage is shrinking. So instead of becoming 50-60% of the world economy, China may only get to 30-40%. Instead of the US falling to 12-13% of world GDP, the US may only fall to 15-16%.

3. What is GDP?

Gross Domestic Product (GDP) was first developed in the 1930s to understand the Great Depression. It measures the production in an economy. The bigger the GDP, the more a country can produce. The value of production is also equal to the income of the economy.

4. What reforms did China undergo in the late 1970s?

Mao Zedong ruled the communist People's Republic of China from when it was founded in 1949 until his death in 1976. His death then created an opening for alternative economic models to take root. The communist system in China did not lead to the economic gains that more capitalist systems could achieve in that period. So the new economic reforms borrowed from capitalist principles. The impact was small in relative terms compared to the world, but as China has grown, China's impact on the world economy has grown.

5. Why is China's population growth falling?

From 1979–2015, China had a "one-child policy" where families were only allowed to have one child, although up to 50% of the population may have been able to have up to two children. China's population is expected to peak in 2031 at almost 1.5 billion and fall to under 1.1 billion by 2100. In that same period, the US population is expected to grow from 351 million to 434 million.

6. What are the population percentage lines after 2019?

Those are estimates based on projections from the United Nations and can be found at Macrotrends.