Monday, February 14, 2011

Japan's Per-Capita GDP is 10X Greater Than China's

The news media is making a big deal about the fact that China surpassed Japan in 2010 as the world's second largest economy, see WSJ article here.  But on a per-capita basis, China's GDP ranks #95 in the world, and is still lagging behind Ecuador and Iran. Japan's per-capita GDP is about 10 times greater than China's (see chart above). 

15 Comments:

At 2/15/2011 3:25 AM, OpenID murosgroup said...

you need also compare labor productivity

 
At 2/15/2011 3:48 AM, Blogger PeakTrader said...

Obamanomics (the antithesis of Reaganomics) has destroyed (e.g. through private unemployment) and displaced (e.g. through government employment) U.S. capacity.

Yet, there's still too much capacity, or slack, in the U.S. economy.

The cheapest way to facilitate U.S. growth is through deregulation, including rolling-back the 130,000 pages of health care regulations.

 
At 2/15/2011 3:57 AM, Blogger juandos said...

"The cheapest way to facilitate U.S. growth is through deregulation, including rolling-back the 130,000 pages of health care regulations"...

Or cut 50% of the money and 50% of the agencies listed in this book of scams...

 
At 2/15/2011 4:34 AM, Blogger PeakTrader said...

Yes, Juandos, and maybe we should start drilling for oil too:

Obama's drilling moratorium causes major company to go bankrupt
February 14, 2011

"On top of tens of thousands of workers losing their jobs when Obama imposed a drilling moratorium by executive order (and fudging what scientists and experts believed in order to justify his moratorium) now comes news that Seahawk Drilling, a major publicly-held drilling services company, has declared bankruptcy due to the sharp decline in Gulf drilling work."

 
At 2/15/2011 1:25 PM, Blogger juandos said...

More from USAToday PT:

Seahawk Drilling seeks bankruptcy, to sell assets

HOUSTON (AP) — Seahawk Drilling Inc. said it has filed for bankruptcy protection and plans to sell its fleet of offshore drilling rigs to a competitor for $105 million.

Seahawk, which announced the deal with Hercules Offshore Inc. Friday, has been hurt by a slowdown in Gulf of Mexico drilling after the BP oil spill last April. The government halted drilling in deep waters and imposed tough new rules that have curtained all energy exploration in U.S. waters.(there's a bit more)

 
At 2/15/2011 7:48 PM, Blogger jeremy h. said...

I agree with the sentiment of this post, but you are slightly overstating the case. Making some sort of purchasing-power adjustment is necessary. Using the same IMF data, Japan is $33,828 and China is $7,518, a 4.5x difference, not 10x.

Note that this also makes the US look a lot better compared to Japan, since the US figure is the base for comparison.

 
At 2/16/2011 3:12 AM, Blogger PeakTrader said...

Japan's per capita real GDP is over 10 times greater than China when quality differences are taken into account, e.g. comparing houses, autos, goods at Wu-Mart to Japanese stores, etc.

Also, of course, China's high social costs, which have a negative impact on living standards, are completely ignored.

 
At 2/16/2011 11:04 AM, Blogger jeremy h. said...

PeakTrader,
What is your alternative data source, which takes the quality differences into account?

 
At 2/16/2011 5:40 PM, Blogger PeakTrader said...

Jeremy, Japan has and meets higher standards.

Quality differences between Japanese and Chinese housing, autos, and other goods are understated, in part, because China cuts corners often and fails to meet its own low standards.

Here's one example:

The Problems and Potential of China's Pharmaceutical Industry
(April 2009)
AEI

"China is dogged by a history of poor-quality pharmaceuticals that have killed hundreds and sickened thousands of its own citizens and people across the globe. The government has begun to tighten its laws, but enforcement remains weak, and official obfuscation is rampant."

 
At 2/16/2011 7:11 PM, Blogger jeremy h. said...

Peaktrader,
I acknowledge that there are quality differences, but conventional PPP measures are supposed to adjust for both price and quality.

Perhaps the IMF measure of 4.5x Japan/China difference is slightly off. But my question was, What data sources claims the difference is "over ten times greater"? This would be a huge error on the part of IMF and other similar sources.

 
At 2/16/2011 8:14 PM, Blogger PeakTrader said...

Jeremy, PPP doesn't come close to adjusting for "price and quality."

Also, if you're looking for accurate economic data on China, good luck.

However, I suspect, China's living standards are much lower than reflected in GDP.

 
At 2/16/2011 8:40 PM, Blogger jeremy h. said...

PeakTrader,
PPP adjustments are certainly imperfect. But they are attempting to make the adjustments for price and quality based on the best available estimates, using best current practices. No offense, but, I suspect these adjustments are more accurate than any one person's intuitions.

 
At 2/17/2011 3:34 AM, Blogger PeakTrader said...

Jeremy, no offense, but economics is a lot more than a simple standard model.

 
At 2/20/2011 10:21 PM, Blogger Ke said...

What about cost of living? What about the underground economy (over $2 trillion in cash)? Two of the many major factors are not accounted into this simplistic graph. If China's GDP per capita is so low, then why do they have a tremendously booming middle class that has been traveling to Canada, the U.S. and Europe to shop like there is no tomorrow?

 
At 2/20/2011 10:23 PM, Blogger Ke said...

This comment has been removed by the author.

 

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