Excellent essay! It reminds me of the numerous homeless I encountered in NY, Washington and SF. The statistics is powerful and credible, and I think it becomes even clearer when we look beyond the extreme poverty line itself.
The surprising fact is not simply that China may now have fewer people living in extreme poverty than the United States. The deeper question is: how can the richest country in the world still allow millions of people to fall below such a low threshold?
This is exactly the issue I tried to examine in my earlier essay, “Why Are the Rich in the US Richer Than Those in China While the Poor Are Poorer?”
The United States is not poor. It is extraordinarily rich. Its problem is that wealth is concentrated at the top while the bottom of society has very little balance-sheet protection. The top 1% in the US owns an enormous share of national wealth, while the bottom 50% owns almost nothing. Many low-income Americans may have higher annual income than low-income Chinese households, but they often have very weak household assets, limited savings, high debt exposure, expensive healthcare, and a thinner social safety net.
That is why the comparison with China is so interesting.
China is still much poorer than the United States in per capita GDP terms. It is not a high-income welfare state. It still has low-income households, regional inequality, urban-rural gaps, employment pressure, and many forms of relative poverty. But China has built a system that is much better at preventing the bottom from falling through the floor.
Part of this comes from rapid industrialization. Part of it comes from infrastructure. Part of it comes from basic public services, rural land and housing arrangements, family savings, targeted poverty alleviation, and a state system that treats extreme poverty as a governance failure rather than merely an unfortunate market outcome.
This is where the US-China contrast matters. In the US, the rich are richer because the system is extremely good at rewarding capital, equity ownership, financial assets, executive compensation, and high-end professional income. But the poor are poorer because the same system leaves the bottom with very little asset cushion and very high exposure to medical shocks, job loss, debt, rent, and homelessness.
In China, the rich are generally less rich than the American rich, but the bottom is less likely to be completely abandoned. The Chinese system does not eliminate inequality. It does not provide European-style welfare. But it does maintain a broader floor under society.
How Exactly? The US has a larger welfare state than China. The US has a large PRIVATE welfare state that does not get counted in OECD stats. See (Howard, 2008) The Welfare State Nobody Knows: Debunking Myths about U.S. Social Policy.
The Problem in the US is that the private providers literally loot the money and it never reaches the people it was meant to serve.
From my research China's welfare state is also extremely lacking compared to Europe.
Good question. Not just US. I understand UK also has a poverty problem. My own explanation is that Western idea of democracy focuses on process and ignores outcomes for the poor. Whereas China’s democracy concerns both process and outcomes.
Your main point is too rarely acknowledged. Well-being is driven less by how much stuff you have than how confident you are that you will have the right amount of the right stuff at the right time.
Excellent essay! It reminds me of the numerous homeless I encountered in NY, Washington and SF. The statistics is powerful and credible, and I think it becomes even clearer when we look beyond the extreme poverty line itself.
The surprising fact is not simply that China may now have fewer people living in extreme poverty than the United States. The deeper question is: how can the richest country in the world still allow millions of people to fall below such a low threshold?
This is exactly the issue I tried to examine in my earlier essay, “Why Are the Rich in the US Richer Than Those in China While the Poor Are Poorer?”
The United States is not poor. It is extraordinarily rich. Its problem is that wealth is concentrated at the top while the bottom of society has very little balance-sheet protection. The top 1% in the US owns an enormous share of national wealth, while the bottom 50% owns almost nothing. Many low-income Americans may have higher annual income than low-income Chinese households, but they often have very weak household assets, limited savings, high debt exposure, expensive healthcare, and a thinner social safety net.
That is why the comparison with China is so interesting.
China is still much poorer than the United States in per capita GDP terms. It is not a high-income welfare state. It still has low-income households, regional inequality, urban-rural gaps, employment pressure, and many forms of relative poverty. But China has built a system that is much better at preventing the bottom from falling through the floor.
Part of this comes from rapid industrialization. Part of it comes from infrastructure. Part of it comes from basic public services, rural land and housing arrangements, family savings, targeted poverty alleviation, and a state system that treats extreme poverty as a governance failure rather than merely an unfortunate market outcome.
This is where the US-China contrast matters. In the US, the rich are richer because the system is extremely good at rewarding capital, equity ownership, financial assets, executive compensation, and high-end professional income. But the poor are poorer because the same system leaves the bottom with very little asset cushion and very high exposure to medical shocks, job loss, debt, rent, and homelessness.
In China, the rich are generally less rich than the American rich, but the bottom is less likely to be completely abandoned. The Chinese system does not eliminate inequality. It does not provide European-style welfare. But it does maintain a broader floor under society.
How Exactly? The US has a larger welfare state than China. The US has a large PRIVATE welfare state that does not get counted in OECD stats. See (Howard, 2008) The Welfare State Nobody Knows: Debunking Myths about U.S. Social Policy.
The Problem in the US is that the private providers literally loot the money and it never reaches the people it was meant to serve.
From my research China's welfare state is also extremely lacking compared to Europe.
Good question. Not just US. I understand UK also has a poverty problem. My own explanation is that Western idea of democracy focuses on process and ignores outcomes for the poor. Whereas China’s democracy concerns both process and outcomes.
Your main point is too rarely acknowledged. Well-being is driven less by how much stuff you have than how confident you are that you will have the right amount of the right stuff at the right time.