In 1980 living standards in China were the lowest among the G20 countries. Since then, median income in China has grown at an average pace of nearly 12% a year: twice the rate of a fast-growing economy like South Korea and three times faster than India. As a result, China’s middle class is richer today than Brazil’s, according to data from the Global Consumption and Income Project, which compares disposable incomes across countries.
A new database, Global Consumption and Income Project (GCIP), suggests that the official figures might be understating the extent of poverty. Even if one adopts a slightly more charitable poverty line of around Rs.38 per day for 2011-12 (i.e. $2.5 per day in purchasing power parity terms), the poverty rate would be 47%, more than double the official statistics
New School for Social Research economists Sanjay Reddy and Rahul Lahoti wrote a detailed critique of the methodology used by the Bank’s latest update in a March article in the magazine New Left Review. The authors stressed, among other things, that the $1.90 per day must be sufficient to meet basic needs in “the base country for which the price indices are defined —that is, the US.”
“This is the best news story in the world,” said Jim Yong Kim, the president of the World Bank, of the announcement this month that the proportion of the world living in poverty is now in single digits, at 9.6%. The claim has rekindled a long smouldering debate over the reliability of such statistics.