Korean Job Discussion Forums

[mack4289]

From yesterday's IHT:

http://www.iht.com/articles/2007/12/09/opinion/edchina.php

"Few people noticed, but China got smaller the other day. According to new estimates, the colossal Chinese economy that has been making marketers salivate and giving others an inferiority complex may be roughly 40 percent smaller than previously thought: worth $6 trillion rather than $10 trillion. That means it lost a chunk roughly the size of Japan's output."

It seems strange for the IHT to complain that few people noticed, considering the IHT itself didn't run a single article about the story. Anyway, there's more. Here's what the revised estimate of China's economy means:

".... the Chinese are relatively poorer and China's economy is smaller than everybody thought.

This is not a mere technicality. Suddenly the number of Chinese who live below the World Bank's poverty line of a dollar a day jumped from about 100 million to 300 million, roughly the size of the United States population.

And if you thought China's energy consumption was dismally inefficient, consider that it still uses the same amount of energy to produce 40 percent less stuff.

The reassessment does not just involve China. India is also likely to be downsized. And, by the way, global growth has very likely been slower than we thought.

... Using the earlier estimate, China's economy was due to surpass the $13 trillion American economy in about five years. At $6 trillion, it may look somewhat less scary."

So here's my question for people who understand economics better than me: does this mean China's economy hasn't, in fact, been growing 10-11% every year? It has to mean that, right? If China's economy is actually 40% smaller, does that mean the growth has been 40% less, more like 6-7% (someone argued this in the IHT months ago http://www.iht.com/articles/2007/08/20/business/econview.php)? This seems like such a huge story, can't believe it wasn't on the front page of every paper.

[igotthisguitar]

China under Chairman Mao was always exaggerating the official stats & numbers to growth & "progress",
industrial output etc.

Ah, the more things change

[thepeel]

You can not trust the economic data provided by any government, let alone a communist dictatorship.

[mistermasan]

there is so much incompetence, fraud and cooking the books in china that it boggles the mind.

i used to live in china. my school was one for the rich kids surrounded by walls and guards in the middle of an "industrial park". back then i was the only foreigner around. the local business folks would seek me out to help them with english correspondence. the documents i was privy to- aiya! stuff like- "we'd like to give you a new loan but until you can account for the last 14,000,000 US we got you we are gonna have to hold up." i would relay the info to the head of the company and he'd ask me to write a reply. i'd ask him "where'd the 14mil go?". he'd shrug and say "we spent it." needless to say, kind ahard to spin that to make it sound good.

accounting standards are non-existant. few people had any idea what it actually cost them to produce something on a per item basis. they just made it and sold it hoping there would be some profit left.

recently i was an industrial hardware sales rep in the US midwest. american manufacturers can't run to china quickly enough. they are like stupid tourists showing the shopkeeper a wad of money and motioning "is this enough?"

the entire business equation is so bad. the blind are buying from the clueless. and yes, this is the nation the capitalist west has cast its fate with.

[stevemcgarrett]

OP:

The International Herald Tribune is a watered-down business class version of the NYT and over the past decade I've found many of their articles on Asia--especially China--shall we say--wanting.

Bad analogy for them to use a bowl of noodles as it doesn't even cost $4. So I don't know where they're getting that figure, even if it's intended to make a point.

As for igotthisguitar, the only thing that hasn't changed much is your uninformed, knee-jerk liberal-in-the-loft response to this kind of thread. Mao's state-run system looked nothing like what exists today.

Speaking of the clueless, thepeel seems to have missed the changeover to socialism in 1976 and the gradual introduction of a market socialism in the mid 1980s.

Besides, the Chinese government has gone on record in its own mouthpieces as wishing for a slower annual growth rate, so they'd have no need to hide these figures. The Foreign Ministry is usually quick to remind Western journalists that China is a developing country despite its rapid growth rate over the past decade and a half.

As for daily living expenses, it varies considerably from big metros like Beijing, Shenzhen, Shanghai, and Guangzhou to smaller cities, towns, and villages. The cost of living in some areas (where most of the poorest reside) is much lower than the national average although clearly there is a looming crisis with migrant workers (as former Premier Zhu Rongji noted five years ago).

All this said, what does it imply for China's RMB rate, which is supposedly 20-30% lower than its actual worth?

[thepeel]

[Kuros]

[thepeel]

The kids of the commies running the massive private firms is exactly why China is best characterized as fascist.

[thepeel]

By the way, the Chinese inflation numbers came out yesterday. Food is up 18.2%. Ha. Here comes the real test to the ccp.

[Ya-ta Boy]

If in fact China's economy is 40% smaller than previously thought, this will go down as a black day in history for the anti-American crowd. They were keeping their fingers crossed for China to over-take the US asap.

[igotthisguitar]

[stevemcgarrett]

thepeel:

Peel the blinders from your eyes and smell the green tea, rope-a-dope.

Aggregate size of the economy and annual growth rate are different? Really? Well who would have thought? The article's conclusions amount to little more than speculation at this juncture.

Inflation is 6.7% at the moment, the highest in 11 years. That figure you cite is suspect and is based on spot shopping comparisons in atypical cities.

[thepeel]

[stevemcgarrett]

thepeel surmised:

[Ya-ta Boy]