What does it mean for China that GDP per capita will exceed $10,000?

 What does it mean for China that GDP per capita will exceed $10,000?

According to the World Banks 2015 standard, low-income countries with per capita GDP below $1045, middle-and low-income countries with GDP between $1045 and $4125, middle-and high-income countries with GDP between $4126 and $12736, and high-income countries with GDP above $12736. According to estimates, Chinas per capita GDP in 2018 is about US$9780, which is on the high side of the middle and high income countries.

Niu Li, deputy director of the Ministry of Economic Forecasting of the National Information Center of China, told China News Agency in an interview that, according to estimates, Chinas per capita GDP in 2018 was about $9777, from $1,000 in 2001 to nearly $10,000 in 2019, which is a microcosm of Chinas rapid economic development and shows a significant improvement in the living standards of the Chinese people.

During the period when consumption plays an increasingly fundamental role in Chinas economy, the rapid growth of per capita GDP is of great significance to Chinas economy. He Lifeng, director of the National Development and Reform Commission of China, recently published an article saying that in 2018, the per capita GDP was close to 10,000 US dollars, and the contribution rate of consumption to economic growth has remained above 50% since 2015. The trend of consumption upgrading driven by the improvement of consumption capacity has become increasingly obvious, which has created tremendous space and potential for promoting the formation of a strong domestic market.

According to the calculation of Niu Li, China will enter the ranks of high-income countries by 2023. Cai Zhizhou, deputy director of the National Economic Research Center of Peking University, told China News Agency that if China could continue to grow at a rate of about 6%, it would reach the level of high-income countries of the World Bank in two or three years.

Chinas entry into the ranks of high-income countries seems to be near at hand, but experts point out that China still has a long way to go to improve the income level of its residents.

Cai Zhizhou pointed out that although Chinas per capita GDP has approached the world average, it still ranks around 70 in the world. Even if it meets the criteria of the World Banks high-income countries, China is still a developing country, which is still far from the per capita GDP of some developed countries of US$450,000.

In addition, some analysis points out that 2019 will be the 18th year for China to enter middle-income countries. From the development experience of other countries, it is the most critical moment for China to cross the middle-income trap.

Middle-income trap is a concept put forward by the World Bank in 2007. It refers to the fact that many middle-income economies under the World Banks standards have stayed at this stage for a long time. The contradiction between the original growth mechanism and the development model has been revealed. The original development advantages have gradually disappeared and they have been unable to enter the ranks of high-income economies. For example, Brazil, Russia and other countries have surpassed the level of high-income countries, but eventually rebounded due to domestic crisis, devaluation of the local currency and other factors.

Cai Zhizhou said that, summing up experience, countries trapped in the middle-income trap often face problems such as political instability, lack of market vitality, lack of innovation in science and technology, and too much influence by external environment. China should persist in reforming measures such as improving market vitality, vigorously promoting scientific and technological innovation, and striving to increase domestic demand. China should adhere to reform and opening-up and maintain its current economic growth rate, such as Only in this way can we safely cross the middle income trap. In addition, per capita GDP and per capita disposable income are still two concepts. From the micro level, we should improve the disposable income of residents, improve the consumption of residents and promote the growth of domestic demand by raising the income level of low-income groups and reducing taxes, so as to promote the whole economic development and realize a virtuous circle.

Source: Author of China News Network: Editor of Chen Tuo Lian: Dai Lili_NN4994