China rising, yellow peril, and poverty

In recent years, the refrain, "China owns us (the United States)" has become a common refrain. I often hear this comment from students and in everyday social encounters. A casual perusal of popular news media seems to reinforce this line of thinking. However, I think such arguments reflect a subtext of racism and insecurity more than reality. As we watch small pockets of immense wealth emerge in China combined with the insecurity of declining American wealth and influence, we are seeing a revival of the "yellow peril" syndrome that was so much a part of western demonization of China in the past. 

To be clear, I am not suggesting that concerns about environmental destruction as China industrializes, overpopulation, or declining manufacturing in the US are not serious issues. Rather, I suggest that we have to pay careful attention to how questions and arguments are framed so that they do not demonize an entire people.

To put things into context about whether "China owns us," consider the following statistics about poverty in China. By looking more closely at the demographics and finances of the whole nation, we can better understand the reality of poverty in China.
  • 200 million people in China live below the international poverty line of $1.25/day.[i]
  • 468 million people in China live with under $2/day.[ii] By contrast, Sub-Saharan Africa has 380 million people who live with less than $1.25/day.[iii]
  • 55% of China's population lives in the countryside.[iv]
  • China is ranked #99 in the world for GDP per capita, which is behind El Salvador (#92), Albania (#94) and Namibia (#98).[v]
  • China ranks #103 among countries for infant mortality, behind Albania (#91), Nicaragua (#98) and Samoa (#102). [vi]
  • The poorest 40% of people in China earn 16% of China's income, while the richest 20% of people in China earn 48% of the national income.[vii]
  • According to the World Association of NGO's (WANGO), there are 63 NGO's operating in China. By comparison, there are 3284 in Africa, 3605 in South & Southeast Asia, 882 in Latin America and 652 in the Middle East.[viii]
  • According to WANGO, each NGO in Africa serves about 300,000 people, while each NGO in China serves about 30 million people.[ix]
Meanwhile, Shang-Jin Wei, Professor of Economics at Columbia University, argues that the wide gender balance in China also contributes to the imbalance of trade between China and and other countries such as the U.S[xiv]
  • The Congressional-Executive Commission on China confirmed in 2010 a report that some local governments are specifically targeting migrant workers for forced abortions.[x]
  • A surplus of men leads to higher savings rates as well as an increased labor supply, which in turn causes the exchange rate of the Chinese yuan to be much lower than in economies with balanced gender ratios. Empirically, those economies with a high sex ratio tend to have a low real exchange rate, beyond what can be explained by the Balassa-Samuelson effect, financial underdevelopment, dependence ratio, and exchange rate regime classifications. As a result, the Chinese yuan is only undervalued by 2% to 8%, since the surplus of men is driving the undervaluing most heavily.[xi]
  • This saving of money also leads to an increase in demand for US Government Bonds in China.[xii]
  • The uneven sex ratio in China can explain half of the increase in private saving between 1990 and 2005.[xiii]
[i]UNICEF and U.N. Human Development Report 2009,
[ii]UNICEF and U.N. Human Development Report 2009,
[iii]World Bank PovcalNet "Replicate the World Bank's Regional Aggregation" at (accessed May 7, 2010). Also see World Bank "PovcalNet" at,,contentMDK:21867101~pagePK:64168427~piPK:64168435~theSitePK:5280443,00.html
[iv]The Economist, The war on baby girls: Gendercide: Killed, aborted or neglected, at least 100m girls have disappeared—and the number is rising
[v]International Monetary Fund,
[vi]UNICEF, United Nations Population Division,
[vii]World Bank,
[viii]World Association of Non-Governmental Organizations,
[ix]World Association of Non-Governmental Organizations,
[x]U.S. Congressional-Executive Commission on China, Annual Report 2010,
[xi]Sex Ratios and Exchange Rates , Qingyuan Du, Shang-Jin Wei, Columbia University, National Bureau of Economic Research, Working Paper #16788, February, 2011. Referenced in the Globe and Mail,
[xii]Justin Lahard, "Preference for Sons in China May Lead to Bubbles in U.S.," Wall Street Journal, June 5, 2009,
[xiii]Referenced in The Economist, The sex trade imbalance; March 10, 2011.
[xiv]Referenced in The Economist, The sex trade imbalance; March 10, 2011.

Original Page: | Mar 4th 2010