China Has the World’s Fastest Growth in Living Standards

Table 2 shows the world ranking of G7 and BRIC countries in GDP per capita and life expectancy. China rates 86th in GDP per capita but 75th in life expectancy – higher than would be expected from its level of economic development. When looking at other countries, the gap between GDP per capita and life expectancy is even more positive in Italy, Japan and France, and lower than China in the U.K., Canada, India, Germany, Brazil, the U.S. and Russia. The countries which have by far the worst results are the U.S. and Russia.

As people in China live significantly longer than would be expected given its economic development level, any claim that China’s rapid rise in consumption is more than offset in terms of rising living standards by health, environment or other considerations is clearly false. The evidence is clear that environmental, health and other factors affecting health quality in China are superior to what would be expected of its level of economic development.

None of this constitutes grounds for complacency. What have been analyzed here are growth rates, not absolute levels. China’s life expectancy (73.5 years) is still significantly behind the U.S. (78.6 years), let alone Italy (82.1 years) or Japan (82.6 years). China must still undergo a prolonged period of economic growth before it achieves the highest levels of the developed economies.

Nevertheless, China is developing from a situation where in 1949 it was one of the world’s least developed countries. It is therefore ridiculous utopianism, which in practice would lead to wrong policies, to believe China can in one step achieve the highest levels of the most advanced economies. The relevant question is whether China is developing living standards and consumption more rapidly than other economies, in which case it is catching up with them, or whether it is developing more slowly than other countries, in which case it is falling behind.

But given that China has the world’s fastest consumption growth, why is the totally erroneous statement made that China’s consumption is underdeveloped? Such claims commit the elementary mistake of confusing China’s growth rate of consumption, the world’s highest, with the percentage of consumption in GDP – which is low in China. But what counts for change in the population’s living standards is how fast consumption is growing, not the percentage of consumption in GDP. For example, the percentage of consumption in GDP of the Democratic Republic of Congo is an extremely high 89 percent, but it is the world’s poorest country for which data exists!

The conclusion is absolutely clear. China has by far the fastest growth rate of consumption in the world, together with life expectancy significantly above what would be expected given its level of economic development. China, in short, has witnessed easily the world’s fastest rise in living standards.