The quality of China's per capita GDP needs improvement

 

　　By data and international standards, China's per capita GDP has entered the ranks of "upper-middle" countries, but per capita GDP must be judged not only by total volume but also by quality

 

　　The incomes of most people are averaged out by a minority; if the housing prices that severely deviate from value are also considered, the income level of the vast majority is even further from the meaning that "upper-middle" should have

 

　　The newly added value within a certain period must be distributed among the government, enterprises and individual residents. If the actual growth rate of government fiscal revenue or enterprise income is faster than GDP growth, the share of residents' income in GDP may decline

 

　　Pan Fan, Director of the Institute of Statistical Science, National Bureau of Statistics

 

　　The National Development and Reform Commission recently stated that the compilation of the 13th Five-Year Plan has been fully launched. The 13th Five-Year Plan period is the last five years for building a moderately prosperous society in all respects, and it is of great and far-reaching significance to start compiling the plan early.

 

　　However, public opinion seems to focus more on a remark by an official of the relevant department: "At present, China's per capita GDP has reached more than US$6,700, placing it in the ranks of upper-middle-income countries. The goal is to approach the ranks of high-income countries by World Bank standards through the efforts of the 13th Five-Year Plan period, and if we do a little better, we may enter the ranks of high-income countries." Many people have expressed doubts about the statement that China "belongs to the upper-middle-income countries." In fact, such situations have occurred more than once. Whenever a government department or research institution states that the country or a certain region has reached the world's upper-middle or high-income level, voices of doubt and dissatisfaction become very strong.

 

　　In fact, judging from numerical data and international standards, China's per capita GDP has entered the ranks of "upper-middle" countries.

 

　　Relevant information shows that the World Bank uses per capita gross national income as the classification standard. GDP plus factor income from abroad minus factor expenditure to abroad constitutes gross national income. Because the scale of factor receipts and payments abroad is limited, per capita gross national income and per capita GDP often differ very little. According to the current World Bank standard, China is indeed in the "upper-middle" category. From this point of view, the official's view has some merit.

 

　　However, this does not mean that the doubts on the Internet are unreasonable. Because in 2012, among the 214 countries and regions included in the ranking, China's per capita gross national income ranked 112th. This is also reality. It can be seen that per capita GDP must be judged not only by total volume but also by quality. Only in this way is the attitude more comprehensive and scientific.

 

　　Gross national income is derived by adjusting GDP. Therefore, gross national income is not the income actually received by individual residents; only part of it will be converted into residents' actual income. GDP or gross national income, as the value newly created by a country or region within a certain period, can be analyzed from the three dimensions of production, distribution and use. Among these three dimensions, distribution is of course the most direct to the public. The newly added value must be distributed among the government, enterprises and individual residents, and the relationship among the three is one of trade-offs. If the actual growth rate of government fiscal revenue or enterprise income is faster than GDP growth, the share of residents' income in GDP may decline. This situation persisted for a long time, reflecting that the income level of the vast majority of people is still very limited. In 2013, China's Gini coefficient was 0.473, still far above the recognized warning line of 0.4, which also reflects that the income level of residents shows a strongly skewed distribution, with the incomes of most people averaged out by a minority. If the housing prices that severely deviate from value are also considered, the income level of the vast majority is even further from the meaning that "upper-middle" should have.

 

　　If examined from the dimension of production, GDP, gross national income and the residents' income formed on that basis are all increments, but the amount of stock consumed in the process of generating the increment and the manner of consumption are indeed different. For example, building a new building, compared with demolishing an old building and then building a new one, the increment is one new building in both cases, but the stock differs: two buildings versus one. If examined from the dimension of use, the same amount of newly added value will have different effects depending on the direction of use: either part is used for redundant construction and creates overcapacity, or part has to be used to remedy damage to resources and the environment, or all of it can be used to create new life; either to create luxury and add flowers to brocade, or to renovate ordinary things and provide timely help, and so on.

 

　　Facing the 13th Five-Year Plan, we must work hard as we go. If the only goal is to "strive to enter the ranks of high-income countries," it is enough to continue expanding the total volume. But to enable more people to enjoy a high-quality life, it is necessary to adjust the structure, improve efficiency, transform and upgrade, and provide support from multiple points; it is necessary to save resources, protect the environment, and change the development model; it is necessary to improve the income distribution adjustment mechanism, narrow the income gap, and let more people share the fruits of reform and development; it is necessary to keep the price level within a reasonable range and promote housing prices to return in the direction consistent with value, so that the general public, after deducting consumer prices and housing price factors, can truly achieve the moderately prosperous goal of "doubling" by the end of the 13th Five-Year Plan period. And these are far more practically significant than expanding the total volume.