China median income tough to adjust for purchasing power parity (PPP)?

Our CIA (a.k.a., “the folks who get everything right”) says that China has a per capita GDP of $16,700 per year (Factbook). Compare to the U.S. at $59,800 or Singapore at $94,100.

But does this attempt simply prove that an economist is someone who knows the price of everything and the value of nothing?

What’s clean air worth to you? In Shanghai this is available indoors to those who buy filtration systems, but walking around in the “fresh air” is not available at any price to residents (an ex-pat friend who has lived there for five years says that the air is much cleaner today than when he first moved in).

How about riding all the way across Shanghai on a gleaming new metro train for $1, e.g., airport to airport? You’re guaranteed never to wait more than 2 or 3 minutes for this train. You can stop into a clean restroom at seemingly every station. This would be a $100 Uber ride in the U.S., e.g., JFK to Newark, and it might take three hours. Can that be factored in? A Suzhou metro ride would cost $50 in the U.S. if the fares had to defray the cost of the infrastructure at U.S. rates (up to $2.5 billion per mile!) and for operation of trains every 3-7 minutes as they operate in Suzhou. Given that the Chinese take a lot of metro rides, do we factor those in as boosting their PPP?

Schools? To send a child to school in the U.S. that offers education comparable to a free public school in Shanghai (World Bank report) would cost $35,000 per year if indeed such a school is available in one’s region. On the other hand, to send a child to a high-quality English-language school in Shanghai costs $50,000 per year(!) according to my ex-pat friend who sends his 11-year-old there (“it is only about $25,000 per year for the international school in Tokyo,” he said, “but the Chinese are willing to pay any price to give their children an advantage so that’s what the market will bear here.”)

Speaking of schools, there is a huge convenient market of after-school activities in shopping malls. These offer gymnastics, dance, English lessons, computer programming, etc. No need to ferry the kids around through ever-worsening traffic in a pavement-melting SUV. Just walk from your apartment to the mall a block or two away. Here was my favorite:

Except for the air pollution, the overall quality of life in the Shanghai/Suzhou/Hangzhou region seems much higher than the CIA numbers would suggest. This is partly explained by Shanghai being richer than average for China (about 2.27X), but not entirely. The relatively high cost of housing in Shanghai alone would absorb most of the income advantage.

29 thoughts on “China median income tough to adjust for purchasing power parity (PPP)?

  1. It looks like a bargain to me. I’m a complete ingenue but it seems like a wonderful western-style city, a showpiece perhaps, but one heck of a showpiece. Particularly if you’re an expat or someone there who runs a business. I would have to stay there for six months before coming to any other conclusions, but I’ll wager that the quality of life is probably better than Baltimore’s for the average resident.

    It’s probably better for the average student who doesn’t own anything, too. I lived in Baltimore as a student and was robbed three times, once at gunpoint, and my neighbor (a literature professor at JHU) three doors down was shot in the stomach when he made the mistake of going out late in the evening to buy milk for his pregnant wife. I’ve been in Baltimore within the past year after dark, and even in the downtown section you wouldn’t want to have your car break down.

    Are there any down-and-out areas in Shanghai? Do they have sections of town where you need a police escort (which you can’t get) to walk around safely? Do they trip over themselves with identity politics and breathless crusades to stop the climate crisis?

    Seriously, they’re kicking the crap out of us in so many ways. It’s a disgrace.

    • Shanghai represents the top in China, you have to be really wealthy to live in Shanghai. It would be naive to assume that the rest of China is the same. One one of my business trips to China, I took a train from Shanghai to another city, once you are outside the main city, you see the how people live outside the main cities. Poverty is not seen in tier one cities in China, it is “regulated” to the lower tier cities. It is very safe in Shanghai, the chance of gun violence or any physical violence is pretty much zero, in addition you are constantly watched by cameras and tracked by your mobile phone location by the service providers.

      China is very well aware of the climate crisis and they plan to engineer their way around it. They also have plans and are making use of solar and wind in areas where it makes practical sense. Nuclear power will be used to replace coal and they have one of the world’s best nuclear fusion research centres near Shanghai.

      In China, society rights are more important than individual rights and freedoms. Social Stability is extremely important to the Chinese. When you try to implement democracy, this is what will happen to you:
      https://en.wikipedia.org/wiki/Liu_Xiaobo

      There is no identity politics, the Han Chinese are on the top and everybody else is sub human.
      Here is an example of political correctness in China.

    • I knew it! The Chinese were responsible for all those American kids eating Tide Pods after taking the Facebook dare!

      https://en.wikipedia.org/wiki/Consumption_of_Tide_Pods

      I don’t doubt the rest of what you say is generally accurate, it jibes with basically everything I’ve read. I know Philip hasn’t shown any pictures of impoverished Chinese from his trip, but I think he stuck to the “Tier 1” this time around.

      I stopped following the progress of the ITER fusion reactor in Cadarache, France because I was disgusted after America basically abandoned its own research in favor of allowing the international effort (of which China and Russia are a part) to take the lead. My cheerleading and interest in the subject declined to almost zero after that, but if the Chinese do somehow manage to make it work in a central power station before we do, that’s it for us monkeys on this side of the pond. Since they’re also a part of ITER I have the feeling anything good that comes from ITER will probably wind up in the Chinese mainland before anyone in France can get it out of theory and into blueprints.

      They did the same thing basically with wind power. Great technology thieves.

    • https://www.justice.gov/opa/pr/chinese-company-sinovel-wind-group-convicted-theft-trade-secrets

      I talked about this back in August. inre: the wind turbine in Boston near the (Formerly Wynn) Encore casino.

      https://philip.greenspun.com/blog/2019/08/08/encore-boston-casino-aerial-photos/

      “The $4.7 million project has been fully financed by the American Resource and Recovery Act (ARRA). One-half of the cost of the project is for purchasing the 1.5 megawatt turbine. The MWRA purchased the turbine from Sinovel, a Chinese state-owned wind turbine company.”

      So American taxpayers paid Sinovel to put American companies out of business. This is Massachusetts, land of the free, home of the brave, Lexington and Concord and all that.

    • By the way the link to the MWRA website I posted back in August has had the text changed, and now contains no mention of Sinovel. Nobody wants anyone to know how badly they screwed America with that project.

  2. America has gone from being colossally stupid to stupid with serious overtones of mortal danger. I know quite a bit about how China got to be the way it is over the past 25 years. In my former home town in another northeastern state, there was a very busy chinese restaurant crammed into a strip mall with a convenience store, a laundry and a bar. My father was is an amiable, avuncular sort of man with a great rapport with people of all races/sexes/religions/genders and national backgrounds. He tells good jokes, so he got to know the matriarch of the restaurant.

    It was an all-cash business. She drove a Mercedes, but it wasn’t registered to her or insured by her. I’ll be the IRS thinks they sold 50 egg rolls and 20 orders of General Tso’s Chicken a year. Her family collected the maximum in welfare, and *all* of her children were born and their pre- and post- natal car was taken care of by the American taxpayer, from what I recall. They all went to college. When you walked into the restaurant, the first thing you saw was a big sign that said: “Terms: Cash.” She had extended family in China and brought them over a few at a time and sent a lot of money back to them. The food was great, they were packed from morning to night – and NOBODY bothered them. The bar was robbed, the convenience store was regularly shoplifted and pilfered from, held up, etc., but the Chinese restaurant was *never* touched.

    • That is nothing, here in Vancouver, they bring money from China in suit cases, then use the local casinos for money laundering, buy real-estate and declare no income and live in $10 million dollar homes. Mercedes, that is for poor people, in Vancouver, you need at least a Bentley, we are now the super car capital of North America, you cannot walk down the street in Vancouver without getting run over by a Lamborghini, Ferrari or Mclaren driven by a young Chinese person, living here on a student visa.

      https://business.financialpost.com/real-estate/billions-in-dirty-cash-helped-fuel-vancouvers-housing-boom

    • They’re here too, not quite so obviously in terms of the cars and the bling, but they’re definitely in the nicer casinos – they don’t hang out near the penny slot machines, I can tell you that. Clean cut, no tattoos, no piercings, very well-mannered. They look like they’ve got a purpose. And if you ask one of them what they do: “I’m a student at [University of Connecticut] etc.” Mohegan Sun is one of the faves but there are others. Now someone like Vince will accuse me of racial profiling. Guilty as charged.

    • And what about the Americans who frequent our biggest growth industry? If you hang out long at an American casino it won’t be hard to smell them after a little while – the perfume, the breath. Dressed like New York street hookers before Giuliani cleaned the place up, tattoos everywhere, drunk, pierced and mouths that would get them thrown out of a longshoreman bar with sailors in town for shore leave. America’s finest.

      @Philg: I know you talked a little about Chinese debauchery, any chance we’ll see casino or gambling pictures from your trip?

    • Sorry, I see you answered that already:

      “Gambling? The U.S. has casinos in 43 states. China proper is home to 0 casinos. Chinese who want to gamble in a fancy casino need to get on a plane and fly to Macau (or the U.S.!).”

    • @Pavel: And some interesting background on engineering. I have a relative who is a fraternity brother of Mike Bloomberg’s. They were EE students at Johns Hopkins within a year of each other, and even dated one of the same girls. Hopkins was all-male at the time. Most people don’t realize that Bloomberg was educated in a rigorous electrical engineering program at a very good school (look up the JHU Applied Physics Laboratory, we used to joke it was the “Department of Death” to counterbalance the Medical School’s “Department of Life” which is unfair to both, but funny) before his career in finance, media, and financial IT (after his stint at Harvard, where he learned where the real money was). He is from the same generation of engineers that built the Apollo program, etc. That’s why he wasn’t very enthusiastic about running for President, because he was going to have to apologize for his entire life, which he has already started doing, and will be doing more of. I guess he reasons that the $100 million + he’s prepared to spend will blunt some of the criticism, and he changed his mind after explaining in detail why he wouldn’t do it, back in March. Go out to about 0:45.

    • @tygertgr: Yup. Xi Jinping is Redder than Red and he has structured the government so he has almost complete control over what goes on. Most people in the West do not understand what they are dealing with.

  3. Speaking of using correct terms. So China is not communist in the Marx sense, it’s not socialist in the USSR sense. So what is it?

  4. Do you know what I wish? In addition to Philip being President, I wish we had actually invented the Transporter (Star Trek). The best thing in the world for me right now would be to visit North Korea, Iran, Russia, and Venezuela with him, to supplement his China trip. He’s got the intellectual bandwith and the scheduling prowess to pull it off, even if we can’t make duplicates of ourselves.

    Eric Tseng did some interesting videos, I love the one of the Hotel Koryo:

    https://www.youtube.com/watch?v=kIhJ7CLygcs

    Your travelogue of Shanghai gives me a bit of the creeps, but in a quasi-envious, nauseous sense, with notes of anger and bewildered fury. Tesng’s videos are deeply, deeply frightening, like seeing a dead body move.

    • Given all the positives about China, there is still something about American ingenuity that gives it an advantage. China is very good at copying and making widgets, this comes from the master / apprentice education culture. The apprentice copies the master, until they can perfectly reproduce the master, and then they become the master and train a new apprentice. It is also due to the culture of the rights of society being more important than the rights of the individual. When it comes to innovation, especially large complex systems, they are not very good. An example of this is after funding their semiconductor industry with billions of dollars, they still cannot match the US.

      From the article below
      “Now that openness is shrinking under Xi Jinping and has been accompanied by greater state economic direction, it is possible that the trend of increasing Chinese innovation will slow or reverse.”
      https://www.csis.org/analysis/chinas-pursuit-semiconductor-independence

      SpaceX could never exist in China. China’s current progress in space is largely due to help from Russia.

      China does want innovation, but they also want government control of society, if they allow to much freedom of thought and innovation, they risk that the people will revolt and become a democracy.

      Another advantage of the US, is that most likely the bottom 10% in the US, still have more opportunity and generally a better life than the bottom 10% in China.

      The question is how long will this last, will China find a way to have innovation without democracy and will the US collapse due to society and economic pressures and loose the innovation edge?

      Here is good youtube channel on China, this will allow you to get as close to visiting China without actually going there
      https://www.youtube.com/user/churchillcustoms/videos

    • @Pavel:

      I wish I shared your optimistic take on the dynamism of the U.S. technology sector and whatever benefits it might have for the United States.. Listen to the (amazingly banal!) things Jeff Bezos just said:

      https://www.cnbc.com/2019/12/07/bezos-says-country-in-trouble-if-big-tech-turns-its-back-on-the-pentagon.html

      “If big tech is going to turn their backs on the Department of Defense, this country is in trouble, that just can’t happen,” Bezos said at the annual Reagan National Defense Forum in Simi Valley, California….“Look I understand these are emotional issues, that’s okay, we don’t have to agree on everything, but this is how we are going to do it, we are going to support the Department of Defense. This country is important,” he added.

      Wow! “This country is important.” What an earth-shattering insight! How much did he get paid in the last year to think that up?

      If the biggest tech. companies in America turn their back on the DoD, “we’re in trouble.” Can someone please tell Captain Obvious that we already know that? Can anyone believe that he even has to say things like this? The fact that he *does* have say anything that elementary, that basic, that fundamental — is enormously disturbing. He has to say it because the big tech. companies have are co-opted by the Left. They want nothing to do with America’s defense or military, particularly if their activist employees have anything to say about it. This is vaunted growth engine of our economy – run by people who have to remind themselves that America is “important.”

      More banality: ““I know it’s complicated but you know, do you want a strong national defense or don’t you? I think you do. So we have to support that,” he said.

      This is coming from, what, the 2nd richest guy in the world? If you wrote that verbatim on a blog as a schlub from West Virginia people would tell you that you speak like a 4th grader. He *thinks* we do…but he’s not sure. The Russians and the Chinese must literally be howling over this stuff, the American ecommerce and cloud computing magnate who has to try to convince himself that “America is important” and he “thinks” we need a strong national defense. Maybe. Or we’re…”in trouble.”

      We’re in a lot more than trouble. That’s a fucking catastrophe, pardon my French. We don’t need the Chinese to become more innovative to beat us. We’ve already lost the war with that kind of patriotism.

    • And contrary to Mr. Bezos’ belief, it’s not complicated at all: he’s living in a house of rats. You don’t need to know anything about the complicated dynamics of geopolitics to understand that when the 2nd richest man in the United States has to try to persuade the other people in the most important private sector industry in the world that maintaining a strong national defense is “important” and that America is important we’re in deep, deep trouble. As though it was some kind of optional accessory?

    • @Pavel: What you’re witnessing here – what we’re witnessing – is a country that is truly on the brink, and our enemies know it. I’ve never heard a weaker and more equivocating statement come from a person so powerful and important. I have absolutely ZERO confidence that this country can recover from that.

    • What’s even more astounding is that we all know that Facebook spends money in the six or seven figures a year to protect the personal safety of Mark Zuckerberg. Amazon or Jeff Bezos himself must spend at a comparable sum. I’ll wager that you can’t get within a half mile of Jeff Bezos without 50 people knowing you’re there, and if you tried to walk up to him and shake his hand to thank him for the wonderful Christmas gift you purchased on Amazon Prime, you’d be instantly intercepted by a team of armed security guards. But he has to try to convince his pals that America needs a strong national defense?

    • There is still hope in the U.S. technology sector as long as there are companies like SpaceX aiming for the stars and building rockets, and you have a large bunch of people cheering the rocket all the way to orbit.

      https://www.youtube.com/watch?v=wbSwFU6tY1c

      The problem is that these types of companies are a very small part of the US economy and other technology companies like Boeing are in decline, due to a change from an engineering culture to a MBA culture.

      Companies like Facebook, Google, Twitter, Amazon, Starbucks, Uber, Wework and etc are NOT technology companies. The majority of the US population does not understand, that these are advertising, propaganda, bookstore, coffee shop, taxi, real estate companies. They do however pay good salaries (at least to the technically skilled), so they attract a lot of talent, so they are popular.

      Technology companies are SpaceX, Blue Origin, Tesla, Boeing, Lockheed, Ford, GM, Intel, AMD, Apple, Honeywell, Microsoft, Xilinx, Analog Devices, TI and etc. These companies have pretty good pay, but require lots of hard work and training before becoming useful, so they are less interesting to new talent. SpaceX is a bit of an anomaly, being able to attack new talent, but they do have a reputation for lower pay and burning out employees. The older established companies in this group are not very popular with Wall Street short range thinking, because they are not growing the rate of the fake technology companies like Facebook.

      Fake technology companies like Facebook have turned their backs on the Defence due to the pressure of the left, but as far as I know, the important defence companies like Boeing and Lockheed are still in full support of the DoD, the issue is that they will not be able to supply the technology required to defend the US due to the short term MBA culture taking over the long term engineering culture.

      The main issue with technology companies is the increasing MBA culture (we need profit now, who cares about what is 5 years down the road, employees are replaceable, just fire them and replace them with cheaper ones or outsource to China) and the hiring of management consultants and the decline of engineering culture in some of the older technology companies (i.e. Boeing and GM). Short term greedy thinking by Wall Street is another major problem, everybody want to make money quickly with no effort, there is no interest in investing for the long term. Every VC wants to exit in 2 years, leading to unicorn companies that are building nothing, WeWork is an example.

      Here is an excellent documentary on “Moon Machines” from the view point of the engineers. This is the type of US engineering culture that scares Russia and China. The US needs to find a way to establish this type of culture again to succeed before the decline is too great to reverse.

    • China’s surge in prosperity is very much based on having some of the last untapped coal reserves in the world. Everybody wants to frame the questions in terms of political systems, but it’s probably about as simple as cheap coal. USA 20th century prosperity and Soviet Union power were similarly rooted in cheap oil.

      China is now running out of coal and the future is not bright, I’d say.

      https://gailtheactuary.files.wordpress.com/2019/06/china-energy-production-by-fuel-to-2018-bp.png

      https://ourfiniteworld.com/2019/09/12/our-energy-and-debt-predicament-in-2019/

    • @Pavel: I’ve taken up enough bandwith hijacking this thread so I’ll keep it short and not very sweet: you hit the high points about what’s wrong, and I doubt the problems you mention can be corrected in time, because it would take an almost complete reinvention of not just the corporate cultures but also our society’s emphasis.

      My father was part of the Apollo-era engineering culture and worked at MIT Lincoln Labs as a customer engineer for IBM, supporting the mainframe systems of the day, among other things involving the effort to develop the Poseidon Missile Guidance system. He saw one of the actual Poseidon laser gyroscope prototypes and worked, among other things, helping to optimize code, because he had a circuit-level knowledge of the mainframes being used to run it. Trust me when I tell you that the engineering culture of the mid-1960s was vastly, vastly different than it is today. It will take at least 25 years of concerted effort (which is going to be politically impossible to accomplish) to alter the culture, assuming we wanted to or believed we should. I have a lot of ideas about how to do it, and the host of this blog is also no stranger to the vicissitudes of venture capitalist / management culture in tech. industry. I appreciate all your kind words but I do have to say we’ve been talking about this stuff for a long time now.

    • @Pavel:

      It’s sad to say but my belief is that the only way to have the United States return itself to a culture of engineering and dispense with all of the leftist nonsense will be to start taking the Chinese and Russian threats as seriously as we did during the Cold War. Consider the fact that two of the most widely quoted people associated with tech and the government are Snowden and Assange (for different reasons). Snowden should be shot for treason at point blank range but the media loves him. Assange too. And don’t get me started with Manning.

      Our problem is that for 30 years or more we’ve deliberately handed our technological/military-industrial prowess to the Chinese on a platter. We allow them to steal, we allow them to transfer and keep our technology, and in this country, all anyone cares about is gender studies and making sure women are represented in STEM. We gave up the farm. My father grew up during the 1950s and early 1960s. Boys Life magazine was writtten on the level of today’s college students and it was intended for children and teenagers. Boys were encouraged to build things, understand things, and not change their genders at age 13.

    • @Alex, great respect for your father being a part of the Apollo-era engineering culture. During my EE degree in the 1990s, i was fortunate to have physics courses with a couple of older physics professors that grew up in the Apollo-era. Most of the text books we used were later editions of physics books, first written in the 1960s. All of them had this great “roll up your sleeves and get to work” ethic. Our EE professors were generally younger, but still had that “roll up your sleeves and get to work” ethic.

      The main issue with today’s left is that they moved away from the key issues of reasonable access to good education, reasonable wages, basic food security and shelter for the poor, basic worker rights, keeping big business honest and accessible health care. In Canada one of the major accomplishments of the left was the universal health care system, but this was back in the 1960s. Now, the left is coming up with crazy ideas about new gender rights, mixed genders rights, gender neutral language, victim rights, rights of lazy people to be lazy, rights of drug users, environmental policy that will result in living like hunters and gathers, even protesting against wind power and the list goes on. One of the worst things (as you pointed out) the left is pushing, is teaching boys, not to act like boys, no competition and etc, this results in low self esteem and lack of leadership and confidence. The Chinese and Russians are laughing at this.

      Wall street is largely responsible for moving the production from the US to countries like China. Technology went with production. Profit, profit, profit and now nobody knows how to make anything. BCG, Bain, McKinsey and other management consultants had their hands in outsourcing production, making presentations about how much more the executives and board members of companies could pay themselves if they outsource production to China.

  5. Though according to the Economist more non-native born people live in Sydney Australia (pop. 5 m) than all of China (pop. 1.5 bil.) so it seems most people are reluctant to try to pick up and move there regardless of what it offers. My experience there is it is a pretty grim place, which is probably why so many people emigrate from there to the US — notwithstanding that it does certain things better than we do.

  6. Countries that people really want to work, live, and raise a family in generally don’t need capital controls or restrictive emigration policies.

    China is a great place for some people to get rich, but once they do, they often seem to look for ways to get themselves and/or their money out, or at least have the option to do so. The only reason anyone surrenders a US passport is to get away from the IRS, like Boris Johnson, who was still a US citizen the first time he ran for PM in 2016.

Comments are closed.