Erik asked in Social ScienceEconomics · 1 month ago

Can someone explain China's economy to me?

I heard 2 things about about China and I am confused. They say China is world 2nd biggest economy that will soon take over the U.S; But also their people make less money than people in the u.s. If everyone makes less money than americans than how can their country be the 2nd economy in the world? I am just so confused....

Can someone explain it to me without dragging out too long? Thank you.

4 Answers

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  • 4 weeks ago
    Favourite answer

    Here's the simple explanation:

    China has an awful lot of people. It's that simple. So, multiply anything times 1.3 billion and you get a big number.

    China is the second-largest economy in the world, on aggregate. That doesn't mean each individual is well-off.

    Per capita the US is far better off than China, but we have only about 1/4 the population of China. 

    Even when China overtakes the US in aggregate GDP, the average person in China will still earn a lot less than the average US person. They just have sheer numbers on their side. 

    As an example, let's say the US has 100 people, each earning $100 per year. That's a total of $10,000.

    If China had 400 people each earning only $30 per year, that would be a total of $12,000. They would exceed the US in aggregate, even though per capita income is much lower. 

  • Oiy
    Lv 6
    1 month ago

    China’s economy is the second biggest in the world in terms of GDP PPP in US dollar.So it is mostly because the price in China is far cheaper than in the US. The MAX index can give the prove.Moreover, in terms of per Capita, China is still  be counted as developing country. And it has still used this status in WTO. So you are right that the wage rate in China is far below from the US. And that supports the outsourcing which is the source of growth in China. If China wants to be number one, it has to change its behavior, more than its GDP. Because number one means responsibility not only for the Chinese but for the world,rich and poor alike.

  • Zirp
    Lv 7
    1 month ago

    What part of "China has a huge amount of underpaid workers and they work hard"  don't you understand?

  • 1 month ago

    people there do make less money...but ignore that and focus on the world...the world uses China as its shipper.. by contstructing huge factories and paying them nothing they increase chinas exports and help the economy.  any money they get from another country helps the economy technically...just we know its not really helping

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