ETA of China's Rise? Delayed, 100 Years.

Playing catchup is a tough game, especially when you're talking superpowers. And according to a piece in the Times by MIT Professor Lester Thurow, while many believe China will, in effect, catch the US this century, for a range of reasons--which include the Chinese government exaggerating the reporting on their economy--Thurow argues that China's century will not be this one, but the next.

Thurow ticks off a list of "implausibilities" put forth by official Chinese statistics. For instance, if the Chinese economy is growing at 10% or more annually, and 70% of the economy in rural areas were not growing, then (according to his math), cities would be growing at 33% a year. Thurow dismisses this as inflated.

Next, he matches economic growth rates to electricity consumption, and he finds provinces where GDP is outpacing energy use. And after a little more math, he decides that the Chinese economy is growing at 4.5 to 6% annually.

These seem worthwhile points for discussion, yet, where is the incentive for the Chinese to inflate their own numbers. With global markets so interconnected, and more, emerging markets taking so much money in from institutional investors, any gains reaped by exaggerated numbers would surely be paid for by the penalties incurred once push comes to shove, no?

Comments

The century is still very young and a lot could happen. It's way too early to predict whose century it is or is not. In 1907 who would have imagined that the 20th century would have unfolded the way it did.