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jacobbarnes
Barker
Joined: Dec 14, 2006
Posts: 127
Status: Offline
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 Posted:
Aug 23, 2007 - 03:16 AM |
 
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| Post subject: Fake growth rates/will this one be the Chinese century? |
August 19, 2007
Economic View
A Chinese Century? Maybe It's the Next One
By LESTER THUROW
CHINA claims that its economy is growing at 10 to 11 percent a year,
and China's official analysts say that their nation will catch up with
the United States long before the 22nd century arrives. Don't believe
it.
First, let's deal with the implausibility of the official Chinese
statistics. Mathematically, if the overall economy were to grow 10
percent annually, and the 70 percent of the economy that is based in
rural areas were not growing (as stated by the Chinese government),
the economy in China's cities would have to be growing by 33 percent a
year. The urban economy is growing rapidly, but not at a 33 percent
pace.
Furthermore, Chinese statistics conflict with those of Hong Kong, the
semiautonomous territory that serves as the financial capital of much
of southern China. In 2001, Hong Kong had a recession, which is to say
that it reported that its gross domestic product fell. Guangdong , the
adjacent Chinese province, has a population of around 200 million. In
2001, it reported that its G.D.P. grew by 10 percent. What are the
chances that both of those numbers are correct? Very slim.
Economic growth rates can be inferred from electricity consumption. In
every country in the world, electricity use has generally grown faster
than the G.D.P. Electricity is necessary for nearly all productive
activities, and because of inefficiencies, consumption of electricity
has generally outstripped economic growth. Rising energy costs have
resulted in more efficient use of electricity, but especially in the
developing world, economic growth has still generally lagged growth in
electricity.
But if China 's official numbers are to be believed, there are
provinces in China where the G.D.P . has been growing faster than
energy use. That is unlikely, since the central government's
statistics also say that energy use per unit of G.D.P. is going up —
not down, as claimed in provincial G.D.P. statistics.
Among the world's 12 most rapidly growing economies over the last 10
years, the G.D.P. has grown only 45 percent as fast as electricity
consumption. In the early 1970s, Japan was shutting down its
electricity-guzzling aluminum industry. During this period, the G.D.P.
grew 60 percent as fast as electricity consumption, the highest
recorded level among industrialized nations.
Using those numbers as a guide, if we consider China's actual
electrical use, which is relatively easy to measure, and do a little
math, we come up with this estimate: The G.D.P. in China has been
growing somewhere between 4.5 percent (using the average for a rapidly
growing country) to 6 percent a year (using the highest rate for
Japan), not at the 10 percent rate claimed in official statistics.
The official statistic for China 's overall growth rate is best
regarded as an approximate growth rate of the economy of its cities.
China also officially claims that it will catch up with the United
States and become the world's largest economy well before the 22nd
century arrives.
There is an equally simple reason that neither of these predictions is
likely to be realized. It simply takes more than 100 years for a
large, less economically developed country to catch up with the world
leader in per capita income. One need look only at the history of the
United States, which had a much higher growth rate than Britain in the
19th century, yet did not catch up until World War I. Or consider
Japan and the United States. Some 150 years after Japan started to
modernize during the Meiji restoration, the country's per capita
G.D.P. is still only 80 percent of that of the United States in terms
of purchasing power parity — although, in nominal terms, it has caught
up.
The United States is not standing still. In fact, its per capita
income grew faster than nearly all other big countries from 1990 to
2007. Europe's per capita income fell from 85 percent of that of the
United States in 1990 to 66 percent in 2007, according to
International Monetary Fund statistics.
So let's say that the inflation-adjusted growth rate for China is 4
percent a year. This is optimistic, because China will certainly have
some bad years in the next century. Every country does — remember the
Great Depression in the United States. A 4 percent rate is faster than
any big country has ever grown for 100 years. But assume that China
can do it. Assume, too, that America grows at the 3 percent rate it
has averaged for the last 15 years.
Now project the two growth rates forward: the inflation-adjusted
per-capita G.D.P. of China would be less than $40,000 in 2100, versus
almost $650,000 in the United States. That's because China starts at
$1,000 per capita and the United States at $43,000. If, in 2100, China
has four times as many people as the United States, as it does now,
China would still not have a total G.D.P. equal to America's.
But it is unlikely to have four times as many people. It is always a
mistake to project population growth rates for a century, but let's do
it anyway: With a one-child policy and a sex ratio that favors boys
(many men won't find wives) — China should experience a decline in
population in the 21st century. Yet let's assume for a moment that
China's population remains constant, at 1.3 billion. If immigration to
the United States continued at the current rate, America's population
would rise. If the population grew at 1 percent a year, as it has
recently, it would more than double by 2100, reducing the enormous
population gap between the two countries. Are these projections likely
to be realized? Who knows?
What is clear is that China is unlikely to surpass the United States
in G.D.P . in absolute or relative terms anytime soon.
There may be a Chinese century, but it will be the 22nd century — not the 21st.
Lester Thurow is a professor of management and economics at the
Massachusetts Institute of Technology. He is also on the board of
Taiwan Semiconductor, which does business in mainland China. |
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BuhayTsina
Ranter
Joined: Aug 20, 2007
Posts: 503
Status: Offline
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| Posted:
Aug 23, 2007 - 10:01 AM |
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Points taken! |
_________________
My mom used to say, "use your eyes"... |
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tetrahedron
Seeker
Joined: Sep 29, 2004
Posts: 66
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| Posted:
Aug 23, 2007 - 11:15 AM |
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The rural population is less than 60% now due to urbanization and 70% of its economy is based on it? The data I have is the agriculture-related economy is about 20% of GDP.
The government said the rural economy is not growing? It might be taken from context. It is not what I saw in person. I traveled extensively in the countryside.
Goldman Sachs predicted that. Facing “the rising China is a thread” suspicion, the government is trying to develop while keeping a low profile (how do you translate 韬光养晦 if leidelaohu or rayfish is reading this?). Some individual officials might have said that, and they do have the ambition but it doesn’t appear to be the government’s intention to brag about the growth rate. In fact, they have been trying to cool down the “over-heated” growth.
Perhaps China will never catch up in per capita terms. As for the numbers, it might be inflated since China’s official statistics is known for not being reliable. But the fast growth is hard to deny.
I know little about economics and this might sound laughable but, how much sense it makes to compare the GDPs from different countries? Health related economy is about a quarter of US’s GDP and prescription drugs cost about 100 dollars while in China, I got a week’s supply of good quality of Cipro (an antibiotics) for 5 yuan. You pay any handyman for some minor home repairs upfront 80 usd while in China, you can have that person for two weeks at your disposal with that much.
A lot of threads lately about fake stuff in China. No one mentioned fake fake-teeth yet. Fake teeth are the real fake teeth with authentic material while in some parts of the country, they have fake fake-teeth that are made from sub-standard material. |
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