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China re-estimate of the day -- whoops!
The Asian Development Bank presented official survey results indicating China's economy is smaller and poorer than established estimates say. The announcement cited the first authoritative measure of China's size using purchasing power parity methods. The results tell us that when the World Bank announces its expected PPP data revisions later this year, China's economy will turn out to be 40 per cent smaller than previously stated......The number of people in China living below the World Bank's dollar-a-day poverty line is 300m - three times larger than currently estimated.
Here is more.
Posted by Tyler Cowen on November 15, 2007 at 09:49 AM in Data Source | Permalink
Comments
This is, of course, in contrast to the accurate population figures, right?
Posted by: Person at Nov 15, 2007 9:55:13 AM
Hi Professor Cowen:
This paper by C Holz at HKUST (an expert on Chinese official statistics)and others accessible through his site are very helpful in understanding Chinese offcial statistics.
http://ihome.ust.hk/~socholz/CQ-Holz-EconomicCensus04-13July07.pdf
Posted by: Gary Shiu at Nov 15, 2007 10:37:37 AM
Holy cow -- some people at Proctor and Gamble (or, more likely, GM) are going to be rescaling some ad budgets! That's the problem with statistics -- people can't *see* the difference between 100 and 300 million!
OTOH, 40% smaller means (among many other things) that their foreign exchange reserves are that much larger, in proportion. Even worse, they have to grow even further before engaging in "my economy is bigger than yours" dick-pulling with other nationalists. Too bad.
Posted by: David Zetland at Nov 15, 2007 11:03:51 AM
Well, before people get too worked up here, keep in mind that China now has an incentive
to look poorer rather than richer. They are trying to maintain favorable treatment at the WTO
that is given to poorer countries. They have a strong motive to look poorer. Takes the pressure
off them on lots of counts. The Chinese are not given to macho posturing, quite the opposite.
The current leadership is very smooth and subtle.
OTOH, it is quite likely this revision reflects some serious realities. There have been
scattered reports out of the countryside about problems especially with rising medical care
costs, among other things. If food and housing have been going up in price also, and it is
believable the Chinese have not kept the best stats, this downward revision is reasonable.
Posted by: Barkley Rosser at Nov 15, 2007 11:56:14 AM
Regarding "mach posturing," the one place that they are given to it is in regard
to Taiwan. They do want to show off their military prowess to Taiwan and the US,
which they have done pretty well by buying lots of subs and knocking out a space
satellite. Otherwise, they tend to try to play with a low profile in most places
and situations. Hu Jintao is very sophisticated in his diplomacy, a major reason
that around the world in most countries, China is viewed far more favorably than is
the US.
Posted by: Barkley Rosser at Nov 15, 2007 11:58:18 AM
"Hu Jintao is very sophisticated in his diplomacy, a major reason
that around the world in most countries, China is viewed far more favorably than is the US."
Barkley, I'd wager that the major differential there not Chinese subtlety but Chinese poverty and weakness. Their impact on the locals tends to be smaller and they don't attach as many conditions to deals as we do, so there's less reason for the local elites to blame or pick on them.
Posted by: Bernard Guerrero at Nov 15, 2007 12:21:28 PM
So, that means my estimate of the number of people living in countries poorer than Mexico (per capita GDP, PPP) of 5,000,000,000 will be roughly accurate for a lot longer.
Maybe all the open borders fans should think about that number for a while.
Posted by: Steve Sailer at Nov 15, 2007 12:55:32 PM
So, that means my estimate of the number of people living in countries poorer than Mexico (per capita GDP, PPP) of 5,000,000,000 will be roughly accurate for a lot longer.
Maybe all the open borders fans should think about that number for a while.
Posted by: Steve Sailer at Nov 15, 2007 12:57:08 PM
Steve Sailer FTL
Posted by: Mark at Nov 15, 2007 3:09:42 PM
Bernard,
Maybe. Heck, even with the larger numbers, they still had pretty low real per capita income,
with lots of people unhappy internally and making lots of demands. And, even with this, they
still have a very high real growth rate, just not the off-the-wall persisrtent 11% per year that
has been reported for some time (although I think that is nominal, not PPP).
Regarding diplomacy, there have been persistent stories about how when the Chinese go into a
country or deal with a country, they make sure that they know all about the country's history
and culture and its leading political and economic interests, and they make any proposals they
make designed to try to fit in with those. I will not say what our approach to such matters
has been for some time in large parts of the world. If one wants to say that the Chinese approach
is a sign of weakness and poverty while ours is a sign of strength and wealth, well, be my guest.
Heck, the Chinese have been willing to lend us the money so we could blow a trillion plus in Iraq.
Posted by: Barkley Rosser at Nov 15, 2007 3:14:05 PM
Maybe all the open borders fans should think about that number for a while.
If they're that poor, they're going to have a hell of a time getting here.
Posted by: Joshua Holmes at Nov 15, 2007 4:46:18 PM
"If one wants to say that the Chinese approach
is a sign of weakness and poverty while ours is a sign of strength and wealth, well, be my guest."
Arrogance is a luxury, my man. Like most luxuries, it is avoided by those trying to better their lot with limited means. Though as with gold jewlery and poor neighborhoods, sometimes you get folks who can't really afford it buying alot for signaling purposes (i.e. Hugo Chavez, if he's got a time horizon longer than a few years.)
Posted by: Bernard Guerrero at Nov 15, 2007 5:08:23 PM
"Hu Jintao is very sophisticated in his diplomacy, a major reason
that around the world in most countries, China is viewed far more favorably than is
the US."
Barkley, if only the US was giving him more competition in the "sophisticated diplomacy" area.
Posted by: ZBicyclist at Nov 15, 2007 5:55:34 PM
Well, diplomacy has a very marginal effect. The world's best diplomacy won't have much effect if two countries national interests are in serious conflict.
America has been the Great Satan in the Middle East for many, many decades, under both liberal and conservative, Republican and Democratic regimes.
Anti-Yanqui sentiment has been rife throughout Latin American ever since the Monroe Doctrine. But that doesn't stop millions from immigrating here.
If China ever replaces the US as the global superpower, then anti-Chinese sentiment will rise -- no matter how sophisticated their diplomacy is. The periodic anti-Chinese riots in countries like Indonesia show that China is already becoming the Big Bad in Southeast Asia.
Posted by: jim at Nov 15, 2007 6:31:54 PM
Well, diplomacy has a very marginal effect. The world's best diplomacy won't have much effect if two countries national interests are in serious conflict.
America has been the Great Satan in the Middle East for many, many decades, under both liberal and conservative, Republican and Democratic regimes.
Anti-Yanqui sentiment has been rife throughout Latin American ever since the Monroe Doctrine. But that doesn't stop millions from immigrating here.
If China ever replaces the US as the global superpower, then anti-Chinese sentiment will rise -- no matter how sophisticated their diplomacy is. The periodic anti-Chinese riots in countries like Indonesia show that China is already becoming the Big Bad in Southeast Asia.
Posted by: jim at Nov 15, 2007 6:32:48 PM
Official numbers are crap. There is a significant amount of undisclosed income floating around.
Top end residential property market in Shanghai and Beijing is around RMB 70,000 per SQM. That's more expensive than luxury apartments in Chicago. There are homes sold in Hangzhou for RMB30mn and apartment buildings in Chongqing going for RMB20,000 per SQM. The significant portion of these sales are in cash.
Car sales are growing at 30% a year and there is no auto financing available - just cash up front. There are now more motor vehicles in Beijing than people.
If people are so poor in China I haven't seen it.
Posted by: asiequana at Nov 15, 2007 6:34:39 PM
Jim, the anti-chinese riots in Indonesia were racially motivated, not politically. Heh. Just like America, Indonesia has chinese immigrants too, you know. The only problem was that after the Dutch colonization, the Chinese people (i.e. immigrants) controlled most of the economy (and they say us chinese are jews of the orient for a good reason). The local 'indeginious' people, the Malays weren't happy, so they went on a riot. A bloody one at that.
It had nothing to do with China. In fact, when the anti-chinese riots in Indonesia happened (circa 1997-2000), China was still quite poor. And no, it had nothing to do with China's claim on the South China Sea either.
Posted by: Chewxy at Nov 15, 2007 10:21:32 PM
asiequana,
For starters some of those high flying buyers in Shanghai are Taiwanese.
For another, inequality has soared in China. Sure there are lots of super
wealthy in the big cities on the east coast. It is clear that this revision
is mostly about rural people where the data has been lousy, where prices of
necessities have been rising, and where people are mostly still pretty poor,
close enough to the poverty line that a fairly small adjustment throws a
couple hundred million below that line.
jim,
"Already?" Indonesians have been rioting against Chinese immigrants for
centuries.
As for the US as permanent Great Satan, I would note that right after 9/11 more
people had a favorable opinion of the US than did not in most Arab countries and
most Latin American countries. Not so anymore.
Posted by: Barkley Rosser at Nov 15, 2007 10:59:29 PM
My point remains: diplomacy is simply not that powerful of a force. Individuals and nations ultimately follow their self-interest.
Public opinion goes up and down -- it's a fairly worthless metric for guiding policy. There have been anti-American riots all over the world periodically long before 9-11 -- and there will be plenty in the future, regardless of our policy.
The rise of anti-Americanism is a predictable, if irrational, response to the post Cold War situation. It's something to take into consideration, like any other superstition or religion ... but America should, and will, act in it's national interest regardless.
Posted by: jim at Nov 16, 2007 12:45:53 AM
Certainly some are Taiwanese and some are honkies and some ABCs. Certainly there is growing wealth disparity between coastal and inland China. But even in the lower end of the market sales of apartments have been brisk. Same cash sales trend. I've toured many of the high and middle income developments and its definitely not speculative money. Projects are definitely lived in. Going away from the coastal cities the trend has been the same. Which is why I mention Chongqing. It's also the same in Chengdu and Kunming, which is the extent of my knowledge of inland China. Lots of strong real demand and not just on the upper end and also mainly cash transactions. I'm just saying I don't trust official statistics because it doesn't gel with what I'm seeing on the ground.
Posted by: asiequana at Nov 16, 2007 2:13:55 AM
"As for the US as permanent Great Satan, I would note that right after 9/11 more people had a favorable opinion of the US than did not in most Arab countries and most Latin American countries. Not so anymore."
Just shows that the highs and lows are fleeting. How'd they fell on 9/10? Not as charitable. Polls are garbage anyway. You really have to judge by actions. How many pro-American gov'ts have been elected since we invaded Iraq? Germany & France went much more our way. England and Australia stayed with us. Denmark is the most recent switch to pro-American. We lost Spain, though.
Posted by: Tom at Nov 16, 2007 9:30:12 AM
Tom,
Denmark most recent? You are off base. Denmark has
been part of the "coalition of the willing" since we went into
Iraq. France is most recent, with Sarkozy, and we have "lost"
quite a few others besides Spain. Also, although some surge of
sympathy after 9/11, it was not that great an increase. Governments have to deal with us, but popular opinion around the
world towards the US has never been lower, never in our entire
history. This is not just some "things go up, things go down"
matter.
Asie,
Sure, there is plenty of money in all the big cities, not just the ones on the coast. The poverty remains in the rural areas, and that is where these adjusted figures appear to be mostly relevant. Given that it is about the basically poor, it has little to do with things like oil demand or military buildups.
Posted by: Barkley Rosser at Nov 16, 2007 3:02:02 PM
Tom,
Denmark most recent? You are off base. Denmark has
been part of the "coalition of the willing" since we went into
Iraq. France is most recent, with Sarkozy, and we have "lost"
quite a few others besides Spain. Also, although some surge of
sympathy after 9/11, it was not that great an increase. Governments have to deal with us, but popular opinion around the
world towards the US has never been lower, never in our entire
history. This is not just some "things go up, things go down"
matter.
Asie,
Sure, there is plenty of money in all the big cities, not just the ones on the coast. The poverty remains in the rural areas, and that is where these adjusted figures appear to be mostly relevant. Given that it is about the basically poor, it has little to do with things like oil demand or military buildups.
Posted by: Barkley Rosser at Nov 16, 2007 3:02:14 PM
"but popular opinion around the
world towards the US has never been lower, never in our entire
history"
Cite, Barkley? That's quite a claim, and I'd like to see some serious backup.
Posted by: Bernard Guerrero at Nov 16, 2007 6:41:52 PM
'You' have lost the Netherlands, for two (besides Spain). Strangely enough, the war in Iraq and Afghanistan (we participate, for a small part) are big issues here.
Posted by: JSK at Nov 16, 2007 6:57:16 PM
