From workers to capitalists in less than two generations: the Chinese urban elite

The transformation of China from a poor and egalitarian country to an upper middle-income country with the level of income inequality greater than in the United States has been the subject of innumerable publications. The Chinese transformation is a unique event in world economic history: never have so many people over such a relatively short period of time increased their income so much. China’s GDP per capita in 1978, at the time of the initiation of rural reforms, was about $1,500; by 2015, it was more than $12,000 (both in constant PPP dollars, data from the 2018 update of the Maddison Project Database.). For comparison, UK GDP per capita was (expressed in the same units) around $12,000 in 1953, while its GDP per capita at the beginning of the Industrial Revolution is estimated at more than $3,000. Thus, it took the UK about a century-and-half to increase its GDP per capita by half as much as China did in less than 40 years (see Figure 1).