Poverty in China

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Poverty in China

 

 

China's poverty line is set at 6.3 yuan per day (which, based on purchasing power, is above the World Bank’s standard of $1.25 U.S. dollars per day); recently, China’s State Council announced that 98.99 million rural people (or 10.2% of the total) fell below that line in 2012.[i]

 

According to the World Bank, 12% of the Chinese population lives in extreme poverty.[ii]

 

As of 2009 (the most recent year for which data is available) 362.2 million people in China lived on under $2/day.[iii]

 

55% of China’s population lives in the countryside.[iv]

 

As of 2012, China is ranked 87th in the world for GDP per capita, which is behind Iraq (86th) and Botswana (69th).[v]

 

As of 2011 (the most recent year for which data is available) China ranks 75th among countries for infant mortality, behind Thailand (68th) and Russia (65th).[vi]

 

As of 2009, the most recent year for which data is available, the poorest 40% of people in China earn 15.4% of China’s income, while the richest 20% of people in China earn 47.1% of the national income.[vii]

 

According to the World Association of Non-Governmental Organizations, in 2013 there are 63 NGO’s operating in China.  By comparison, there are 3968 in Africa, 3555 in South-Central Asia, 937 in Latin America and 727 in the Middle East.[viii]

 

A surplus of men leads to higher savings rates as well as an increased labor supply, which in turn causes the exchange rate of the Chinese yuan to be much lower than in economies with balanced gender ratios.  Empirically, those economies with a high sex ratio tend to have a low real exchange rate, beyond what can be explained by the Balassa-Samuelson effect, financial underdevelopment, dependence ratio, and exchange rate regime classifications.  As a result, the Chinese yuan is only undervalued by 2% to 8%, since the surplus of men is driving the undervaluing most heavily.[ix]

 

This saving of money also leads to an increase in demand for US Government Bonds in China.[x]

 

The uneven sex ratio in China can explain half of the increase in private saving between 1990 and 2005.[xi]

 

Shang-Jin Wei, Professor of Economics at Columbia University, argues that the high gender imbalance in China is leading to the trade imbalance between China and other countries such as the U.S[xii]

 



[i] The Economist, “World-Class Poverty,” February 27, 2013, http://www.economist.com/blogs/analects/2013/02/chinas-poor

[iii] The World Bank, World DataBank: Poverty and Inequality Database, http://databank.worldbank.org/data/home.aspx (accessed May 30, 2013)

[iv] The Economist, The war on baby girls:  Gendercide:  Killed, aborted or neglected, at least 100m girls have disappeared—and the number is rising, March 4, 2010

[v] International Monetary Fund, “World Economic Outlook Database,” April 2013, http://www.imf.org/external/pubs/ft/weo/2013/01/weodata/index.aspx

[vi] The World Bank, World DataBank: World Development Indicators, “Mortality Rate, Infant (Per 1,000 Live Births),” http://databank.worldbank.org/data/home.aspx (accessed May 31, 2013)

[vii] The World Bank, World DataBank: Poverty and Inequality Database, http://databank.worldbank.org/data/home.aspx (accessed May 30, 2013)

[viii] World Association of Non-Governmental Organizations, Worldwide NGO Directory, http://www.wango.org/resources.aspx?section=ngodir (accessed May 31, 2013)

[ix] Sex Ratios and Exchange Rates , Qingyuan Du, Shang-Jin Wei, Columbia University, National Bureau of Economic Research, Working Paper #16788, February, 2011.  Referenced in the Globe and Mail, http://www.theglobeandmail.com/report-on-business/economy/economy-lab/the-economists/currency-manipulation-sex-ratio-drives-yuan-lower/article1933949/.

[x] Justin Lahard, “Preference for Sons in China May Lead to Bubbles in U.S.,” Wall Street Journal, June 5, 2009, http://online.wsj.com/article/SB124415971813687173.html

[xi] Referenced in The Economist, The sex trade imbalance; March 10, 2011. http://www.economist.com/blogs/freeexchange/2011/03/trade

[xii] Referenced in The Economist, The sex trade imbalance; March 10, 2011. http://www.economist.com/blogs/freeexchange/2011/03/trade

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