How Rich is China?: Evidence from the Food Economy

Abstract

In the late 1970s, the World Bank reported that China's 1976 per capita GDP was US$410. This was more than twice as high as India's, almost twice as high as Indonesia's (US$240) and higher than Thailand's (US$380). Over the next thirteen years, the same World Bank publications recorded average growth in real output per head in China at around 8 per cent per annum, which was substantially higher than in Thailand, and about twice as high as in India or Indonesia. During the same period, the real purchasing power of the US dollar fell by half. Yet the World Bank recorded China's per capita income in 1990 at US$370, about the same as India's (US$350), much less than Indonesia's (US$570), and about one-third that of Thailand (US$1,420).1 This is a puzzle which, pending its resolution, raises doubts about the whole statistical basis of our understanding of China's growth performance in the era of reform. Has China really not grown so fast over the past d6zen years; have the economists of the EMF, the World Bank and the world's main centres of scholarship been duped; and is China due one day for the sort of downgrading of perceived levels of output and rates of growth that Eastern Europe has experienced since the disintegration of the Berlin Wall? Or were the higher numbers for China's GDP that the World Bank was reporting a dozen years ago closer to the reality than the later, revised data, so that the recent data greatly underestimate GDP? The apparently conflicting observation of high growth and falling per capita GDP during the 1980s is partly a result of sizeable and successive depreciations of the Chinese currency (renminbi) relative to US dollars. But a