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March 24, 2010

China Should Become Upper Middle Income Country this Year Per World Bank Classifications

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The world bank classifies the economies of countries by GNI per capita, calculated using the World Bank Atlas method.

The groups are:
low income, $975 or less
lower middle income, $976 - $3,855
upper middle income, $3,856 - $11,905
high income, $11,906 or more.

China's GDP grew 8.7% to 33.5 trillion yuan in 2009.

The World Bank is forecasting China's GDP growth in 2010 to be 9.5% Inflation will reach 3.5‐4 percent on average in 2010.

The yuan is expected to appreciate to about 6.6 to 6.7 to the US dollar by the end of 2010

Looking at an expected range of exchange rates and GDP growth estimates:
33.5 trillion * 1.095 growth / 1.35 billion @ 6.7 exchange rate
would be $4055 per capita

This is higher than the $3856 cutoff and has some room for inflation adjustment of the 2008 number.



33.5 trillion * 1.1 growth / 1.35 billion @6.6 exchange rate would be $4135 per capita

33.5 trillion * 1.105 growth / 1.35 billion @6.5 exchange rate would be $4219 per capita

There is a 2010 business and population census in China. This could lead to an adjustment in estimated population and a new estimate of GDP.

China should become a high income country in 2016-2017 assuming 9% annual GDP growth and the yuan appreciating to about 3.5 yuan to the US dollar. It is also assumed that China's population will peak in 2026 at about 1.4 billion people (US Census Bureau estimate)

China Per Capita GDP Estimates
2010  $4150
2011  $4870
2012  $5760
2013  $6860
2014  $8070
2015  $10800
2016  $12800  - Exceeds the $11906 cutoff for World Bank High Income
2017  $15100  - Probably exceeds an inflation adjusted cutoff 
2018  $17300
2019  $18800
2020  $20300

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