China’s Quality of Life Statistics: Standard of Living vs. Nominal GDP


As pretty much any economist worth his salt can confirm, it’s relatively easy to find numbers which paint whichever picture you want to “pitch” or, in other words, I for one can easily come up with more than plausible fact-backed scenarios which paint a picture of glowing prosperity for China. However, I can just as easily find statistics which tell us the exact opposite.

While I don’t necessarily adhere to the adage that the truth is always in the middle, I do firmly believe it’s certainly NOT in the extremes in the overwhelming majority of cases. As such, through this article, we will be doing just that: going over the proverbial extremes so as to have the context-related “foundation” necessary to form an objective opinion.

Let’s start with the positives.

And, right from the beginning, I want to make it clear that most metrics do indeed paint a very positive picture for China as a whole. With “as a whole” being the operative term because as we will find out later on, things aren’t as peachy for the average Chinese citizen… at least not yet. For now, let’s stick with the positives and mention that, indeed, such arguments abound. From China being the world’s #2 nation by nominal GDP and actually on position #1 in terms of PPP GDP to industry-specific statistics, which have China as the worldwide leader when it comes to anything from “old school” industries such as coal to new ones such as solar energy production, wind energy production, electric cars and so on.

Furthermore, even for industries where China is not yet the global leader, the industry-specific growth rate pattern makes it clear that it is only a matter of time until China will reach position #1. This is especially valid for highly research and development-dependent industries such as Artificial Intelligence, robotics and so on.

Even if we venture outside the relative comfort of economics and analyze dimensions such as China’s geopolitical influence, we cannot help but notice positive mega-trends, with textbook examples such as the China-dominated Asian Infrastructure Investment Bank and especially the $4 to $8 trillion Belt and Road Initiative… let’s just say that there are more than a few irrefutable examples which make it clear that China’s geopolitical influence is skyrocketing. Can one say it is spending its way to becoming geopolitically influential? Most definitely. But in the end, what matters more: HOW China gets there or WHETHER China does it?

Unfortunately, it’s time to move on to the negatives.

If you’ve read the three paragraphs which pertain to the positive aspects associated with China, you’ve most likely noticed a peculiar pattern: that discussions exclusively revolve around “China” as an entity, with not that much attention being paid to the individual. This is the dichotomous dimension of our analysis, the realization that there’s a remarkably significant gap between the situation of China as a whole and the situation of the average Chinese.

As mentioned in our article about the more or less misleading aspects which pertain to China’s population, we need to understand that a lot of today’s China-related success stories are, to a very significant degree, a function of China’s 1.4 billion population. In other words, yes, China has a GDP of over $14 trillion, with only the United States with its $21+ trillion surpassing it. However, China’s GDP was generated by the combined effort of 1.4 billion citizens, whereas the GDP of the United States is the result of the combined effort of just over 300 million citizens.

As we move from country-oriented statistics to more granular “per capita” ones, we cannot help but notice that not only is China not a global leader, it is actually below average when it comes to many metrics. For example, while China does indeed have the world’s #2 nominal GDP, if we divide it by its current population, we cannot help but notice that according to recent World Bank data, the US has a roughly 6.5 times higher GDP Per Capita than China. Far from dominant, one might say.

More specific indicators such as the household disposable income (based on data provided by the National Bureau of Statistics of China and corroborated by the Federal Reserve Bank of St. Louis) paint the same picture: that the situation isn’t as great on a granular level. While when it comes to affluent regions such as Beijing and Shanghai, we’re looking at roughly 50,000 CNY per person, we cannot ignore poorer regions such as Xizang, Gansu or Guizhou, where the disposable income on a per capita basis is approximately 5 times lower. And even in regions such as Beijing and Shanghai, a lot of income-related advantages are melted away by comparatively high costs of living, with real estate prices being a whopping 7 times higher compared to regions such as Shaanxi, Guizhou or Hunan. As strange as it may sound, if we were to compile an index where the per capita household income is adjusted by let’s say real estate prices, people in Beijing or Shanghai are actually worse off than the average Chinese from a quality of life perspective.

After drawing the line, we realize there is actually little in the way of controversy when it comes to our analysis. The data, if we take the time to actually go through it properly, paints a fairly logical picture of reality, one which easily passes empirical validation: the fact that China as an entity is remarkably dominant when it comes to more and more country-oriented metrics but that the average Chinese citizen still has a lot of catching up to do until parity with Western counterparts is within reach.

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