 "Sluggish economy takes China further away from high-income status")
Bad news, one after another, continue to affect China which has been facing economic turmoil post COVID pandemic. In the latest, the country’s poor per capita gross national income in dollar terms has pushed it further from World Bank’s threshold for a high-income country status.
China’s per capita gross national income declined in dollar terms and was down 0.1 per cent to $12,597. This so, amid a sluggish economy and a weaker yuan.
But why is it important?
China’s per capita gross national income declined for the first time in 29 years in 2023.
How China measures Gross national income?
Gross national income (GNI) measures what individuals and companies earn within the country as well as from abroad. It is calculated by adding net interest and dividends earned overseas to gross domestic product.
Minimum per capita GNI
As per the annual revision of World Bank’s income classification in July, the minimum per capita GNI for the high-income category was raised by 5 per cent to $13,846.
China’s GNI came in 9 per cent short of that mark, after it had narrowed the gap to just over 1 per cent in 2021.
China has been what the World Bank considers a middle-income economy — one where per capita income is between $1,000 and $12,235 — for about 25 years.
Impact Shorts
More ShortsWhat’s going wrong with China’s economy?
In the beginning of 2023, China had ended its economically painful zero-COVID policy, despite that the country has been seeing a protracted slump in the real estate market which continue to drag down the economy, and corporate profits and household incomes stagnated.
Per capita GNI rose 4.7 per cent in yuan terms, but this was still a slowdown from the 5 per cent increase in 2022.
Also, China’s job market has not seen much recovery, with 3.52 million people eligible for unemployment benefits at the end of 2023, about 550,000 more than a year earlier and the highest figure in comparable data going back to 2012.
Depreciation in yuan was also one of the reasons in the downturn in dollar denominated GNI. The Chinese currency was 4.5 per cent softer on average last year than in 2022, at 7.0467 to the dollar, on interest rate hikes in the US as well as economic weakness at home.
With inputs from agencies
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