For almost three decades, China’s economic growth has been packaged and promoted into something of mythical proportions.
At the same time, China has transformed from the “world’s factory” into the “market of the world.”
The spending power of China’s consumers has increased, and with the financial crisis now gripping economies worldwide, some say that China will be the savior of the global economy.
China’s economic growth is a subject of profound exaggeration.
Few delve into the true state of the Chinese economy, with most people subscribing to an illusion.
This has led businesses to adopt poor investment strategies and the government to formulate a dangerous strategy of opening up to China that places the Taiwanese economy in peril.
After major reforms were introduced in the late 1970s, government figures have reported double-digit growth almost every year, turning the Chinese economy into the world’s third-largest behind the US and Japan.
This status is not in dispute, but the importance and effects of constant, high-level growth have been exaggerated and misinterpreted in telling the saga of a wonder economy.
Taiwan also experienced strong economic growth for several decades.
This is commonly referred to as an economic “miracle” and, together with South Korea, Hong Kong and Singapore, Taiwan was one of the Four Asian Tigers. This economic “miracle” can be described and explained through objective data, and it is substantiated by greatly improved living standards and average wealth.
But does China’s growth stand up to equally strict scrutiny?
This has long been a topic of interest in international economic circles.
Some renowned economists have said they do not believe China’s statistics. Nobel economics laureate Paul Krugman has said that reading Chinese economic growth data is like reading a science fiction novel, while Massachusetts Institute of Technology professor Lester Thurow has wondered if Chinese economic officials themselves have the faintest idea of the nation’s true growth figure.
Cheng Xiaonong (程曉農), the deputy president of the Center for Modern China at Princeton University, has said that China’s economy has very serious problems, but that the outside world has been kept in the dark by erroneous information released by the Chinese government — as well as the fear of some Chinese economists to speak the truth.
Some media outlets have published data that helps expose the sham involving China’s growth figures.
First, the Chinese government insists that there is hope of growth reaching 8 percent this year, yet according to official data, in the first eight months of this year, Chinese exports dropped by 22.2 percent, while foreign direct investment decreased by 17.5 percent.
Chinese officials also said that at some point this year the rate of change in industrial production would increase over last year. However, power consumption is dropping.
Further, China’s National Bureau of Statistics has announced that China’s GDP for the first half of this year was 13.98 trillion yuan (US$2.05 trillion), but data from China’s 31 provinces, cities and autonomous regions put the figure at 15.38 trillion yuan, a difference of 1.4 trillion yuan, or approximately 10 percent.
Who is wrong? Are the central government’s statistics faulty or are local governments exaggerating growth to win approval from Beijing? Either way, it is impossible to have faith in official Chinese statistics.
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