The NYT reported on new measures of purchasing power parity GDP from the World Bank that show China to be about 40 percent poorer than the old measures. The article notes that some economists question the accuracy of the new measure. It would have been helpful to explain a bit more the reasons for skepticism. The new measure puts China's per capita GDP in 2005 at $4091, this would be at the level of one of the poorer countries in Latin America. The reason why this seems problematic is that China is reported as having had extraordinary growth over the prior quarter century so that per capita GDP (measured in constant units of Chinese currency) is reported as being 680 percent higher in 2005 than it was in 1980. Given the $4091 figure for 2005, this growth path would imply that China's per capita income in 1980 was about $525 (in 2005 dollars), which would make it far poorer than any country in Sub-Saharan Africa at present. There is no doubt that China was a poor country in 1980, but it had a life expectancy of close to 70 years, near universal literacy and its population generally had food and clothing. These are not features that one would expect to see in the poorest country in the world. In short, one must either reject the new measure for China's PPP GDP or reject the growth rates that have been reported over the last quarter century. I don't know which is more suspect, only that the two are inconsistent given plausible views about China's 1980 living standards.
--Dean Baker Addendum: For comparison with China's implied 1980 per capita GDP of $525 (in 2005 dollars), we have the following numbers on per capita income for 2005 from the IMF (using the old data): Chad -- $1,729 Congo (Democratic Republic) --$800 Ethiopia --$1,026 Niger -- $915 Nigeria -- $1,153 Zambia -- $1,109