China's Poverty Reduction Compared to Persistent US Inequality
China reduced the number of people living on less than $3 per day (in 2021 dollars) from 943 million (83% of the population) in 1990 to zero by 2019. In contrast, in the United States, more than 4 million people, about 1.25% of the population, live on less than $3 per day, a figure more than triple the number from 35 years earlier.
Despite the US GDP per capita being about six times higher than China's, poverty and severe inequality remain significant challenges in the US. The middle-income share of national income declined from 52.5% in 1980 to 48% around 2000 and further to 42.5% in 2023, relative to the top 90th percentile. The poorest 10% of Americans receive roughly 1.8% of national income, a share comparable to countries such as Bolivia, which reports 1.8%, while other countries include Nigeria at 3%, China at 3.1%, and Bangladesh at 3.7%.
Factors contributing to US inequality include globalization and automation, which have reduced labor's share of income and favored more-educated workers. Policies such as Trump's tariffs and the proposed Big Beautiful Bill Act are expected to raise costs and reduce health coverage through Medicaid, ACA subsidies, and SNAP. According to Yale Budget Lab estimates, these changes would result in income losses for all but the richest fifth of Americans, with the bottom 10% facing approximately a 7% reduction.
The analysis argues that inequality in the US results from policy choices rather than inevitability. This contrasts with China's poverty reduction under an undemocratic regime with targeted strategies, highlighting the differences in wealth distribution approaches between the two countries.
