Questioning China’s Rise

Lester Thurow, former dean of MIT’s Sloane School of Management, wrote an interesting piece in today’s International Herald Tribune, questioning the accuracy of the Chinese government’s claims to astronomical growth rates.

If he’s right, then other countries have much greater leverage over the Chinese government than Beijing would have us believe.  China’s leadership has tried to cast an air of inevitability over its rise, in large part to create a self-fulfilling prophecy as foreign countries and corporations jump on the China bandwagon.  Is it an illusion?

Professor Thurow addresses the improbability of the Chinese government’s official growth 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 was not growing, as stated by the Chinese government, the economy in Chinese cities would have to be growing by 33 percent a year. The urban economy is growing rapidly, but not at a 33 percent pace.

He then looks at energy consumption as a useful surrogate for economic growth, and finds similar improbability:

Economic growth rates can be inferred from electricity consumption.

In every country in the world, electricity use has generally grown faster than the gross domestic product…

But if China’s official numbers are to be believed, there are provinces in China where the GDP has been growing faster than energy use. That is unlikely, since the government’s statistics also say that energy use per unit of gross domestic product is going up - not down, as claimed in provincial GDP statistics.

He also notes that historically, “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.”  Even more so when the less developed country has four times the population.

What does this mean?

China is certainly developing, and ordinary Chinese are escaping poverty in historic numbers.  This is good. 

From a geostrategic perspective, however, we should take the “rise of China” with a grain of salt.  China is definitely getting wealthier and more powerful; but the breathless proclamations about how China is quickly going to become the next superpower are, well, overstated.  The Chinese government has shown no compunction about providing “flexible” statistics or outright lies when it suits its agenda.

As people buy into the story of China supplanting the United States in a few decades, there is a rush to get on the good side of the regime that rules China and brutally occupies Tibet.  Thus, we see a shameful abandonment of the principles that the Chinese government finds threatening.  But as former British Prime Minister Margaret Thatcher wrote, “the Chinese need the West more than we need China.”  This is likely to be true for some time. 

This means that people who genuinely care about the Chinese people, and the Tibetan people, shouldn’t allow themselves to be silenced by those who say, ”the Chinese government is too powerful to criticize, and we can’t afford to be locked out of the Chinese market.”  China is growing, and that’s a good thing, but it doesn’t mean we suspend our values of human rights, freedom, and basic decency.