Inside Out | As Blinken visits China, the US should keep the big economic picture in mind
- If China continues to grow faster than the US, there may be as many rich Chinese as rich Americans by 2040, even as poor Americans would be worse off
- The US needs to recognise that its imperious approach to negotiation is unacceptable to not just China, but also other nations in the Global South
For the big picture, Milanovic carves the past 200 years into three “ages of inequality” – the Great Divergence between 1820 and 1950 in which the industrial revolution and the peak of colonial power drove rising inequality both within and between countries; the “Three Worlds” period from 1950 to 2000, which saw a narrowing of inequality within countries, but still large inequality between the first and third worlds; and the great convergence since 2000, which has been marked by the meteoric rise of Asia and in particular China.
So far, so familiar, but the practical details can surprise: in 1988, the median urban Chinese earner would have ranked around the 45th income percentile globally. But by 2018, he or she would have risen to the 70th percentile, into the top 30 per cent of earners worldwide.
Milanovic calculates that there are today about 40 million Chinese earning more than the median US income (there are 165 million Americans in this group) but that if China continues to grow at 3 per cent faster than the US, then by 2040 this affluent Chinese group will have risen to 165 million. In short, there will by then be just as many moderately affluent consumers in China as in the US.
Milanovic says: “China is tantalisingly close to something that no one would have predicted when Mao died in 1976: that in 70 years, [China] would have as many rich citizens as does the United States.”