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June 03, 2010

Prediction of When China Will Become a Developed Country

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When will China become a developed country?
First we have to consider which definition of developed country to use.
The UN HDI (Human Development Index) is a statistical measure that gauges a country's level of human development. It combines life expectancy, education, literacy and per capita GDP on a PPP basis China has good statistics for life expectancy, education and literacy. So as they catchup in per capita GDP to the lowest of the developed countries Barbados then China should be developed. China had a 77.2 HDI in 2007 and it was increasing at 0.009 per year. It would then take 14-15 years for China to exceed the 90 HDI cutoff or 2021 to 2022 with a two year lag in the UN HDI statistics. (Oct 2023 for 2021 statistics).



The other measure is the World Bank High national income cutoff. China is becoming an upper middle income country this year.

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


There are other developed country definitions at wikipedia, but they are based on things like lifestyle surveys.

Extending the IMF PPP GDP per Capita Forecasts
Over 5 years (2010 to 2015) Barbados is projected to improve per capita GDP PPP by 23.5% while China's projected improvement is 69%. If China and Barbados maintained the same rate of improvements then China would pass Barbados on per capita GDP PPP in 2026.

A significant part of China's high GDP growth comes from urbanization. China is expected to continue to have high levels of urbanization for 15-20 years. 2% of China's population moves to the cities where they eventually are integrated and become three times more productive (according to GDP). This is a 4% boost to annual GDP. This 4% boost to GDP should last to 2025-2030 and then slow down to 2% for another 5-10 years and then go away.


The IMF published GDP per capita forecasts out to 2015.


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