China and the United States are the two largest economies in the world, but there are stark differences between the two countries when it comes to poverty and standards of living. On the surface, China’s massive population and rapid modernization makes it easy to assume that poverty is more widespread in China compared to the US. However, the reality is more nuanced. In this article, we will analyze the latest poverty data and standards of living metrics between China and the US to determine if China really is more “poor” than America.
Defining and Measuring Poverty
To answer the question of whether China or the US has higher poverty rates, the first step is to define what we mean by poverty. There are a few common ways poverty is measured:
- Absolute poverty – Living on less than $1.90 per day, adjusted for purchasing power and local costs of living. This is the World Bank’s international poverty line.
- Relative poverty – Living below a poverty threshold defined relative to the median income in a country. For example, living on less than 50% of a country’s median income.
- Multidimensional poverty – A measurement that considers multiple deprivations in areas like health, education, living standards, and employment.
The most common metric used for cross-country comparisons is absolute poverty, since it uses a consistent dollar-per-day threshold across all countries. Relative poverty thresholds can vary greatly depending on the income distribution in each country.
For China and the US, we will rely primarily on absolute poverty rates for comparison. However, metrics on multidimensional poverty and access to basic needs also provide useful context on standards of living.
Poverty Rate Comparisons
Here is a look at poverty rates in China versus the United States based on absolute and relative poverty metrics:
Absolute Poverty Rates
| Country | Population in Absolute Poverty |
|---|---|
| China | 0.6% (2015) |
| United States | 1.2% (2019) |
According to the World Bank, 0.6% of China’s population lived below the $1.90 per day absolute poverty line as of 2015. For the United States, 1.2% of the population lived below the absolute poverty line in 2019. By the $1.90 per day metric, China’s absolute poverty rate is around half that of the United States.
Relative Poverty Rates
| Country | Population in Relative Poverty |
|---|---|
| China | 9.2% (2015) |
| United States | 17.8% (2019) |
Measuring relative poverty paints a different picture. The relative poverty rate looks at the percentage of the population living below 50% of the country’s median income. By this metric, China’s relative poverty rate was around 9% in 2015 while the US rate was 17.8% in 2019. The US relative poverty rate is nearly double China’s by the 50% of median income measure.
The takeaway is that while China has lower absolute poverty, largely due to its rapid development over the past few decades, it has a significantly lower relative poverty rate compared to the US. This suggests higher inequality in the US, where tens of millions live below the relative poverty threshold despite the US being a very high-income country overall.
Poverty Reduction Trends
Looking at how poverty has changed over time also provides useful context. China and the US have gone in opposite directions when it comes to poverty reduction since the 1980s:
- In China, the share of the population living in absolute poverty fell from 88% in 1981 to 0.6% by 2015. Rapid economic growth lifted over 850 million people out of poverty.
- In the US, absolute poverty has fluctuated between 11-15% over the past several decades, with no clear trend. The relative poverty rate has increased from around 12% in the late 1970s to 17.8% in 2019.
China’s progress in reducing poverty, especially absolute poverty, has been unmatched globally. The US meanwhile has tread water on poverty and low-income measures, with growing inequality and relative poverty rates near record highs. This context helps explain why China’s current poverty rates are lower today.
Standards of Living Comparisons
Beyond just poverty rates, looking at broader measures of living standards and access to basic needs also informs the comparison between China and the US:
Access to Electricity and Clean Water
| Country | Access to Electricity | Access to Clean Water |
|---|---|---|
| China | 100% (2020) | 96% (2020) |
| United States | 100% (2020) | 99% (2020) |
China has achieved universal electrification while also making significant progress on providing clean water access to its large population. The US maintains near universal access on both measures, which represents a higher standard of living.
Average Life Expectancy
| Country | Life Expectancy |
|---|---|
| China | 77.3 years (2020) |
| United States | 78.9 years (2020) |
People in the US live longer on average than in China. However, China has rapidly improved life expectancy in recent decades.
Mean Years of Schooling
| Country | Mean Years of Schooling |
|---|---|
| China | 7.8 years (2020) |
| United States | 13.1 years (2020) |
Educational outcomes are substantially higher in the US, where the average person receives 13.1 years of schooling over their lifetime compared to 7.8 years in China.
Human Development Index
The United Nations Human Development Index (HDI) measures health, education, and living standards in one composite metric. This helps compare broader welfare beyond just income.
| Country | Human Development Index |
|---|---|
| China | 0.761 (2019) |
| United States | 0.926 (2019) |
The US ranking of 17th globally on the HDI is significantly higher than China’s ranking of 85th. This suggests higher overall human development and welfare in the US.
Reasons for Differing Poverty and Development Levels
Why does China have lower monetary poverty while the US performs better on broader welfare and standard of living indicators? There are several contextual factors at play:
- Starting point – China was significantly poorer than the US 40 years ago at the start of market reforms. Rapid growth brought 700 million people out of extreme poverty. But China still has progress to make transitioning to an advanced economy.
- Income inequality – China’s income inequality has risen significantly. Its relative poverty rate reflects income distribution being comparatively more unequal than the US.
- Health and education – As a middle-income country, China’s health and education systems lag behind those of the US, impacting measures like life expectancy and years of schooling.
- Urban-rural divide – China’s rural areas are poorer on average than urban regions. Lack of access to economic opportunities and social services in rural zones contributes to lower standards of living.
- Transition challenges – China faces demographic and economic headwinds transitioning to a high-income economy that can constrain poverty reduction progress.
In summary, China has lagged the US in human and welfare development despite rapid gains in recent decades. But China also started from a much lower base, and its massive reduction in absolute monetary poverty reflects substantial improvement.
Conclusion
Based on a multidimensional analysis of poverty measures and living standards, it is clear that people in China experience higher levels of deprivation on average compared to the US. However, China has made incredible strides reducing extreme poverty over the past 40 years from a very low starting point.
In an absolute sense, poverty is now less widespread in China compared to the US with a lower share of the population living on less than $1.90 per day. But broader quality of life and access to basic goods and services still favor the US. Furthermore, China has higher relative poverty reflecting substantial income inequality.
So in terms of monetary poverty metrics, China has surpassed the US. But America maintains advantages in living standards, welfare, health and education. With continued economic development and urbanization, China may close this gap in human development over time. But for now, China’s rapid growth has not yet translated into higher standards of living across the board compared to the United States.
