Will China be able to catch up with Greece?

China's leader Xi Jinping recently set a goal of achieving the per capita income of a "middle-development country by 2035." Will this goal be achieved? In our view, it is unlikely. Continued rapid growth faces a number of obstacles, such as an aging population and declining returns on China's growth investment model. Other barriers to growth are also emerging, including increased government management of the economy, increasing credit problems in real estate and other sectors, and restrictions on access to key foreign technology. Even with generous assumptions about future growth fundamentals, China appears likely to be able to close only a small portion of the gap with''high-income countries in the next few years.

Although it is not clear which group of countries Xi had in mind when referring to developed countries, classified by the IMF as 'Developed Economies' seems a natural choice. This group consists of thirty-two economies, with per capita incomes in 2022 ranging from $36,900 (Greece) to $127,600 (Singapore) at purchasing power parity. We define the "median" starting at the 25th percentile for this group, which corresponds to a per capita income of $49,300.

China is currently a middle-income country, with a per capita income of $21,400, placing it just above the 60th percentile of the global income distribution.

An analysis of history underscores the difficulty of this task. Of the forty-three countries that reached China's income level by 2009, none could achieve the necessary growth rate to lift China into the 25th percentile of advanced economies over the next thirteen years. In fact, the median income growth rate over thirteen years for this group is 3.1 percent, with only five countries having growth above 4 percent. For the twenty-four countries with incomes above $49,300, it took an average of thirty-two years,''to rise from China's current income level. Only two have done so in fewer years.

It takes unprecedented growth to achieve high-income status by 2035.