The Chinese economy is recognised as the second largest in the world behind that of America. The population of China is estimated as being 1.35 billion souls whereas America’s population is about 319 million. The GDP per capita figure for China is estimated as about $6800 whereas the comparable figure for the US economy is $52800 according to the World Bank – this figure is the ratio of GDP to the population and enables a quick and dirty comparison of the wealth of countries. 6.3% of the Chinese population live below the $1.25 per day poverty line – roughly 85 million people.
The latest inflation reading for the USA (November 2014) came in at 1.3%. In China, inflation rose marginally from 1.4% in November to 1.5% last month. This is close to the lowest inflation rate seen in the Chinese economy for about five years. However, the cost of certain food items, such as eggs, went up by significantly more than the headline rate: egg prices rose by 14%. The annual inflation rate for the year came in at 2% - the Chinese government aims for an inflation figure of 3.5%, but the undershoot can be blamed on subdued global demand rather than domestic factors.
Another measure of inflation, the producer price index (PPI) which involves wholesale and factory price costs, has fallen by 3.3% in the year to December. This index has now fallen for 34 straight months in China. Whereas the latest decline has been partially attributed to the decline in the oil price, clearly it is not the full story since the collapse in oil prices only really started to bite in the summer. If the oil price remains subdued, many nations around the world will see inflation falling as cheaper fuel and energy costs feed into economies.
China’s growth for the third quarter came in at 7.3% and the nation’s GDP is estimated to be worth $9.3 trillion ($9300 billion). Whilst the nation has done much to reduce extreme poverty, much clearly remains to be done to enable more of the China’s citizens to enjoy the fruits of the Communist Party’s flirtation with capitalism.