Per capita GDP is artificially inflated. Who is paying the price for such anomalies like the lira exchange rate?

In 2019, I wrote an article observing that China’s per capita GDP surpassed $10,000, placing it on the same level as Russia, Brazil, Mexico, Turkey, and Malaysia at the time. Back then, based on various infrastructure and living standards indicators, China clearly outperformed these countries. I naively predicted that a significant gap would soon open up. But six years later, reality has given me a big slap.

According to World Bank data, from 2018 to 2024, the per capita GDP evolution of these six countries has been completely unexpected. The 2024 figures show that China not only failed to widen the gap but actually lagged behind Turkey, Russia, and Mexico. Even when converted at the 2025 average RMB to USD exchange rate of 7.1429, China’s per capita GDP is only $13,953, while Turkey reaches $18,529, Russia $17,445, Mexico $12,931, Malaysia $12,853, and Brazil $10,355.

Data Contradicts 2019 Predictions: Why Is China Falling Behind?

How absurd is this result? Comparing the data from 2019 reveals the answer. Turkey’s per capita GDP doubled from $9,395 to $18,529, Russia grew by 50%, while China only increased by 34%. Relatively, Mexico and Malaysia’s growth rates are close to China’s, with Brazil being somewhat further behind.

This phenomenon forces us to consider a question: Is there a systemic flaw in the per capita GDP framework? To understand this, we need to delve into the economic logic of these anomalous countries.

The Turkey Lira’s Vicious Cycle: High Interest Rates Sustain False Prosperity

Take Turkey as an example. Its economic model is truly bizarre. The annual inflation rate ranges from 35% to 60%, and nominal GDP growth even reaches 45%. According to conventional financial principles, such high inflation should cause the exchange rate to plummet. The Turkish Lira has indeed depreciated significantly, but surprisingly, Turkey has maintained a relatively stable Lira by raising interest rates above 40%, using extreme high-interest rates to sustain the currency’s stability.

What is the result? When measured in USD, per capita GDP has actually increased sharply. This “poison to cure poison” high-inflation economics completely diverges from normal operational logic. On the surface, Turkey’s economy still functions—tourists number 53.7 million annually, service exports grow by 35%, and nominal GDP in USD remains supported. But this model is inherently unhealthy; the Lira’s credibility has long collapsed. Even banks offering 40% interest rates can’t reassure depositors, and market confidence in the Lira has shattered.

Russia’s Ruble and USD: Shared Problems, Monetary Policy Overreach

Russia follows a different but equally strange path. Its economy heavily relies on resource exports. Domestic inflation pushes up nominal GDP in local currency, but the exchange rate performance is highly unstable and severely decoupled from inflation. The ruble hasn’t depreciated excessively because Russia’s export structure is relatively simple, with resource trade volume enough to support the exchange rate. However, this reliance on resource exports to stabilize the currency exposes its fragility. The inflated per capita GDP figures for Russia and Turkey are likely overestimates; actual living standards are probably significantly lower than China’s.

Global Financial Chaos: Risks Are Building Up

This anomaly isn’t isolated; it reflects a broader chaos in the global financial system. The US is also starting to “show strange signs.” Its nominal GDP has surged, with per capita GDP approaching $90,000—up 37% since 2019, even surpassing China’s growth rate.

More countries are adopting similar tactics: aggressively pursuing inflation policies domestically to drive rapid nominal GDP growth. Meanwhile, through interest rate hikes and currency decoupling, they maintain exchange rates. The result is a false prosperity in USD terms, while the credibility of their local currencies rapidly erodes. The Turkish Lira has become a pariah, no one dares to hold it long-term; the Russian Ruble has become a trading tool—businesses accepting rubles immediately convert to goods or USD.

Most concerning is that the US dollar’s international credibility is also declining sharply, possibly the most significant international financial event in recent years. The soaring prices of gold and silver reflect market fears about the collapse of the fiat currency system.

Reflection and Warning

Returning to my initial misprediction: although my 2019 forecast that China’s per capita GDP would outpace other countries did not materialize—China has instead fallen further behind the US—this isn’t due to China’s economic decline. The real issue is that some countries are engaging in reckless currency manipulation, which will inevitably come at a cost. The artificially inflated per capita GDP figures, extreme cases like the Lira’s exchange rate, and the chaos in the global exchange rate system all warn us of a harsh reality: when false prosperity becomes mainstream, genuine risks are accumulating. How long this global financial game can continue remains uncertain.