China has become the richest country in the world. You heard that right. According to a report, China has overtaken America to become the World’s Richest Country. You’d think this is something to celebrate for the Chinese government and the Chinese people. But at the same time, many economic experts are pointing out that China may soon fall into a major economic crisis. How did this happen? And what is this looming economic crisis?
Wealth And GDP
First, what does it mean to be the richest country? You can understand it as ‘wealth‘ basically. How do you measure how rich a person is? By evaluating the landholdings of the person, the total value of his properties, the businesses he owns, the machinery in the businesses, the total value of all these is used to calculate the total wealth of the person.
This is different from the GDP. You can understand GDP to be the equivalent of the annual income of a person. The GDP of a country is the total value of goods sold in a country in a year. The value of goods as well as services. The total market value of all goods and services in a country. And the GDP can be divided into 3 main sectors. When we talk about the GDP, we need to account for the population of the country. Suppose a family earns ₹1,000 per month, and there are 2 children in the family. And there’s a family earning ₹2,000 per month, but there are 10 children in the family.
If the same amount of money is distributed among so many people, then they would get less per person. So even though the GDP of a country may be high, if the country has a high population as well, then it isn’t admirable. That’s why we calculate the GDP Per Capita, that’s mainly the GDP per person. China has become the richest country in the world in terms of wealth. If you add up the wealth of every person in China’s population, then it is the richest country in the world. But if we talk about GDP per capita, China doesn’t stand anywhere near the top.
