Comments by "Ari Romain" (@dopey0682) on "Jake Tran"
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@Mikamichae To make this claim, the Chinese government uses a poverty line of about $2.25 a day, in 2011 prices and adjusting for purchasing power. The World Bank believes that a threshold of $1.90 a day is appropriate for countries with per capita incomes of less than $1,000 or so, such as Ethiopia. For lower-middle-income countries such as India—with per capita incomes between $1,000 and about $4,000—it recommends a poverty line of $3.20 a day. For upper-middle-income countries like China, it reckons that a reasonable poverty line is $5.50 a day. In other words, the Chinese government uses a poverty line appropriate for a country making the transition from low- to lower-middle-income, even though China is 10 times as wealthy.
Actually, China is almost as well off today as the United States was in 1960 when it became a high-income economy (using the World Bank’s classification). Around that time, the U.S. first adopted an official definition of poverty, classifying people as poor if their daily consumption was less than $21.70 in 2011 prices, four times what the World Bank today considers reasonable and about 10 times what China believes is adequate. In a forthcoming paper, my colleague Eric Dixon and I estimate that in 1960, using the $21.70 cutoff, fewer than a quarter of all Americans lived in poverty (Figure 1 is extracted from that paper). But by this criterion, between 80 and 90 percent of Chinese people would today be considered poor. If our numbers are correct, China is years—if not decades—behind schedule.
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