China: Rich Country, Poor Country

China's increasing openness since 1978 has handsomely benefited its economy, which is now nine times larger, and has lifted 400 million Chinese out of extreme poverty. China's economy has become the world's fourth-largest if measured at current exchange rates or second-largest if measured in terms of purchasing power. In all likelihood, and by any measure, China's economy will be the world's largest 25 years from now. Powerful But Still Poor Globalization has driven China and, increasingly, China is driving globalization. But China exhibits another paradox that the West often overlooks: It is simultaneously a great economic power and a poor country. In 2005 its annual per capita GDP was $1,400, one-thirtieth that of the U.S. Even if adjusted by purchasing power, China's per capita GDP ranks 118th in the world. In fact, China is poorer, relative to the U.S., than was Japan in 1950, before Japan's recovery and amazing growth in the second half of the 20th century. In addition to being a low-income country, China also has severe imbalances in its areas of development: between, for instance, its drive for prosperity and the impact of this on the environment; its explosive demand for natural resources and its relatively poor resource base; its accelerated unleashing of market forces and its lack of social safety nets; its private sector and its state-owned enterprises; the incomes of its rich and those of its poor; the hyperdevelopment of some of its coastal areas and the underdevelopment of its inland regions; and, most risky of all, its vibrant economic freedom and its lack of political freedom. http://www.forbes.com/forbes/2006/0522/035.html?partner=weekly_newsletter

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