How is it, all of a sudden, that the Chinese became so economically powerful and rich, while Americans and Europeans became poorer?

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There are a few things wrong with the question:

  • First, the Chinese didn't become wealthy overnight:  China's (relative) prosperity is the result of roughly 30 years of smart economic policy paying off in the 21st century.

  • Second, the Chinese are rich compared to where they were at the time of Mao's death, or even 1989.  And the nation's economy is either the first or second largest in the world.  But China is also an enormous nation, with 1.35 billion people, a billion more than the United States.  On a nominal GDP per capita basis, China is similar to countries like Romania, Argentina, and Malaysia, countries that are plainly no longer poor in the global sense (like a Sierra Leone or Democratic Republic of Congo) but are also far from rich.  In other words, China is a middle-income nation that has the capability to eventually become wealthy should current trends continue (something that is less than certain).  Presently, however, on a per capita basis, the average Chinese citizen is less than 1/4 as wealthy as an average citizen of a highly-developed Western country, such as the United States, Canada, Germany, or Ireland.

  • Third, most Western countries are still growing in terms of wealth, albeit not at rates comparable to China's.  Bringing a nation out of poverty is a difficult feat, but we typically see highest rates of growth in nations transitioning from poor to middle-income, and then from middle-income to wealthy, because there is still a lot of "low-hanging fruit" in terms of economic drivers.  When people transition from subsistence farming in poor rural villages to being urban consumers, there's an enormous amount of new economic activity as people purchase homes, cars, phones, TVs, and other staples of global middle-class life for the first time.  China has had a long (indeed, unprecedented) period of growth because as noted above, it is an enormous country, with about 20 percent of the world's population--that's a lot of cars, skyscrapers, etc.  But once a nation has an established middle-class economy, very few wealthy nations see sustained high rates of economic growth--you may have the odd quarter or even year of economic booms, but not decades.  Look at countries like Chile or Japan as examples.  Chile is no longer a poor country, but it has not been able to transition into a wealthy one.  And Japan, which once seemed poised to be the richest nation on earth, has settled on per capita wealth comparable to Italy (a wealthy country by global standards, but not compared to its northern neighbors). 

  • Fourth, it is true that as China ascends, the West and Japan's relative power is declining.  But it does not follow that the West is getting poorer, just that the gaps between the West and China are shrinking.  This isn't to say that the West can take its prosperity for granted, because clearly, that is not the case, and it doesn't take much imagination to envision a world 25-50 years down the road in which Western standards of living (in particular, in southern Europe) will decline.  But it does not follow that China becoming rich means that the West will become poor.



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