Comparing China to other Majority-Chinese Jurisdictions

When writing about Argentina a few days ago, I used this weight-loss analogy to explain that Javier Milei has some amazing accomplishments, but that he can’t rest on his laurels.

Imagine going to a doctor and finding out you have all sorts of health problems because you weigh 400 lbs. You decide you need to get serious (the diet-and-exercise equivalent of electing Milei) and you weigh 300 lbs. at your next appointment. The doctor is very impressed and happy with your progress, but he reminds you that you still need to lose at least another 100 lbs.

This analogy also applies to China.

There was a lot of pro-market reform beginning in 1979, leading to a dramatic increase in economic freedom. This led to spectacular results, such as rapid growth, rising incomes, and plummeting poverty.

Call it the Chinese Miracle. It is akin to dropping from 400 lbs to 300 lbs.

Unfortunately, even though the doctor advised the patient to lose another 100 lbs., that hasn’t happened.

Economic freedom in China has increased in the past two decades, but only by a very small amount. If we stick with our analogy, the patient lost 5-10 more lbs., but is still overweight.

I’ve decided to write on this issue today for two reasons.

• First, I’m actually in China for some lectures about the desirability of further economic liberalization.
• Second, I saw this tweet about how Chinese people outside of China are far richer than Chinese people in China.

I decided to expand on this chart, using the Maddison database, and using data that goes all the way back to 1950. And I also included Hong Kong since it is another majority-Chinese jurisdiction.

Lo and behold, the only Chinese nation that isn’t rich is…drum roll…China.

There’s an obvious lesson to learn.

Note that I included numbers on the right side of the chart. Those are the economic freedom rankings from the Fraser Institute.

Singapore, Taiwan, and Hong Kong all rank very highly. China, on the other hand, is only #104, in the bottom half of the world for economic freedom.

Maybe, just maybe, that explains why the Chinese are rich everyone in the world other than China. The moral of the story is that our patient is much healthier today than 50 years ago. However, it’s time to get back on the treadmill and lose more weight.

P.S. Here’s some interesting data on China and Poland.

P.P.S. I shared data back in 2016 showing that Chinese-Americans were very economically successful. And more-recent data confirms this to be the case.

———
Image credit: Foreign and Commonwealth Office | CC BY 2.0.