Friday, August 24, 2007

China's Growth

China growing at only 4.5%-6%? Don’t believe it! Yet, this past weekend, MIT professor and former Dean, Lester Thurow made just such a claim in the Sunday New York Times. I’ve long been a fan of Thurow’s work, including some very insightful approaches to thinking about the global economy, but in this case I’m not buying. Instead, in response to his statistical gymnastics, I’d like to counter with the adage popularized by Deng Xiaoping: “learn truth from facts!” Walk the streets of even modest Chinese cities, not to mention Shanghai, Beijing, Dalian and even Chengdu, and you can see that China is experiencing something closer to“explosive,” rather than “modest” growth. Sure it’s possible to be taken-in by Potemkin villages, but these are real villages, with real people!

Thurow suggests that the Chinese themselves believe that the rural areas are “not growing.” Could this be true? Of course, there must be places in the interior of China which growth has not yet touched, but again, the reality of actually being in the countryside, where everything from product availability to housing is changing – be it in Anhui or Tibet -- on an enormous scale, suggests that real growth is occurring; maybe not at 10%, but strong growth, nonetheless. He then compares Hong Kong’s growth with that of Guangdong, ignoring completely that the one of the world’s financial capitals may have different economic patterns than that of “the world’s factory.” Finally, on the basis of electricity consumption statistics -- numbers that have always given China-watchers fits -- and per-capita macro-economic comparisons, he deems the 21st Century to not be the Chinese century!

Professor Thurow, you’ve missed the entire point! Over the past thirty years, China has moved roughly 20% of the world’s population from the 19th century to at least the late 20th; and in some places the 21st. Chinese people are better fed, better read, and better off than possibly at any point in the 7000+ years of Chinese civilization. Chinese workers take holidays! Chinese basketball players play in the NBA. Chinese peasants take foreign tours! A Chinese automobile manufacturer has reached 1 million units, while a Chinese computer company now bears the “think-pad” brand. Chinese cosomonauts are planning to walk on the moon. Chinese movies are in our theatres. And, China is no longer irrelevant to the global economy, as it was just three decades ago.

Will the 21st Century be the Chinese century? Who cares? In fact, we should all care because such labelling does no one any good. It portrays the global marketplace as a zero-sum game. If the 21st century is Chinese, whose isn’t it? What we should be hoping for, instead, is that China continues to grow, and comes through this period without any serious disruptions. That the possible speed-bumps along the way – inequality, infectious disease, trade-barriers, bachelors – don’t divert China from its growth trajectory. A strong, economically-healthy China is in all of our interests. Wouldn’t it be great if the 21st century was the “World” Century!

1 comment:

Jean-Pierre said...

of course you are perfectly correct. China's growth may be somewhat chaotic - and indeed dangerous - but there is no doubt growth is strong. as you say, walk around! my own comment though is that you should perhaps revise your apparent admiration for Thurrow. It may be worth while to read, among others, his book Head to Head that appeared in the very early 90s arguing that the European economies would outperform the US and even Japan! the great advantage these guys have is the short memories of their public! Lester Thurrow was not known at MIT as "less-than-thorough" for nothing!
Jean-Pierre Lehmann