Fjordman: China's Economy: Miracle or Myth?

Wednesday, September 14, 2005

China's Economy: Miracle or Myth?

China's Economy: Miracle or Myth?

Many Western businesses, like their counterparts centuries ago, seem just as willing to engage in all sorts of ungentlemanly acts and have often discarded their own principles in order to wrest market share of the Chinese economy from their competitors. But what has almost never been discussed is the dark side of China’s economy—one that prompts the question of why China’s market has been “untapped” for so long. Xie, like many other China scholars, warns that there may be more to China’s budding GDP than meets the eye, pointing out that “there exist many puzzling contradictions, inconsistencies, and even deceptions in Chinese economic life.” One of the more anomalous inconsistencies in the Chinese economy was revealed by Dr. Thomas Rawski, a professor of economics at the University of Pittsburgh. Dr. Rawski studied the Chinese economy from 1996 to 1999. During that period of time, accumulated GDP of China grew by 25.6 percent. One would expect that the rate of energy consumption would increase correspondingly. However, despite the 25.6 percent GDP growth, energy consumption during the same three year period actually dropped by 12 percent. Obviously, says Xie, these numbers don’t add up. Neither do provincial reports on GDP growth. During last year’s People’s Congress, officials from within the central government confessed that the GDP numbers from local and provincial governments, when tallied together, were inconsistent with the national GDP. In fact, the numbers were off by difference of 3.9 percent. “A percentage of 3.9 percent may not sound like a big number, but when talking about GDP growth, it represents a huge difference,” says Xie. Similarly, in 2001 the bureau of statistics found 62,000 false reports on growth had been filed between the months of May and October of that year alone. One also has to wonder how, despite China’s claims of consistent GDP growth, it continues to account for less and less of global GDP. During the reign of the Qianlong emperor (1711-1799) in China’s last dynasty, China’s GDP accounted for 51 percent of the world’s total. In 1911, when Sun Yat-Sen founded the Republic of China, that number was at 27 percent. By 1923, it had dropped further to 12 percent. When the Communist Party took power in 1949, China’s GDP accounted for only 5.7 percent of the world’s total. In 2003, the number was even lower at just 4 percent. Finally, if indeed China is enjoying a booming economy with its GDP growing at such an impressive rate, it should naturally follow that the country is full of employment opportunities. Unfortunately, as professor Xie points out, that’s not the case. “When the United States experienced recession in the early ’90s, the unemployment rate was around 7 percent, and we were screaming like crazy. Prof. Hu Xingdou of the Beijing University of Science and Technology said that the Chinese unemployment rate is at least 20 percent, and it could be as high as 30-40 percent.”