Sunday, March 1, 2015

Reasonable Suspicion on Chinese Growth Rates

I have nothing against China specifically.

But, I do know generally that the real GDP values and growth rates of countries that don’t have open political and media systems should not be taken at face values.

So, in 2014 IV, China reported growth over the previous 4 quarters of 7.3%. That’s very high: it will lead to doubling in size every 10 years, and this is for a country with a very low population growth rate, so almost all of it could be viewed as improving real GDP per capita.

Unless …

Here’s an example of what Chinese academics are allowed to say about China’s economy from inside China:

… The consumer price index dropped to 0.8%; the producer price index fell by 4.3%; exports contracted by 3.3%; imports were down by 19.9%; and growth of broad money (M2) slowed by 1.4%.

Moreover, the renminbi has come under downward pressure, owing partly to economic recovery in the United States, which has fueled capital outflows. Given huge declines in industrial profit growth (from 12.2% in 2013 to 3.3% last year) and in local-government revenues from land sales (which fell by 37% in 2014) …


I suggest there’s some dissonance between what the more granular numbers say, and what the government announces for the consumption of incredulous western legacy media.

None of this changes viewpoints I’ve been clear on before: thinking China’s economy is larger than that of the U.S. right now is foolish, and thinking that China’s economy won’t be bigger than that of the U.S. in 30 years is also foolish.

Via Marginal Revolution.

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