Copyright The New York Times
August 19, 2007
CHINA claims that its economy is growing at 10 to 11 percent a year,
and China’s official analysts say that their nation will catch up with
the United States long before the 22nd century arrives. Don’t believe
First, let’s deal with the implausibility of the official Chinese
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 were not growing (as stated by the Chinese government), the
economy in China’s cities would have to be growing by 33 percent a
year. The urban economy is growing rapidly, but not at a 33 percent
Furthermore, Chinese statistics conflict with those of Hong Kong, the
semiautonomous territory that serves as the financial capital of much
of southern China. In 2001, Hong Kong had a recession, which is to say
that it reported that its gross domestic product fell. Guangdong, the
adjacent Chinese province, has a population of around 200 million. In
2001, it reported that its G.D.P. grew by 10 percent. What are the
chances that both of those numbers are correct? Very slim.
Economic growth rates can be inferred from electricity consumption. In
every country in the world, electricity use has generally grown faster
than the G.D.P. Electricity is necessary for nearly all productive
activities, and because of inefficiencies, consumption of electricity
has generally outstripped economic growth. Rising energy costs have
resulted in more efficient use of electricity, but especially in the
developing world, economic growth has still generally lagged growth in
But if China’s official numbers are to be believed, there are
provinces in China where the G.D.P. has been growing faster than energy
use. That is unlikely, since the central government’s statistics also
say that energy use per unit of G.D.P. is going up â€šÃ„Ã® not down, as
claimed in provincial G.D.P. statistics.
Among the world’s 12 most rapidly growing economies over the last 10
years, the G.D.P. has grown only 45 percent as fast as electricity
consumption. In the early 1970s, Japan was shutting down its
electricity-guzzling aluminum industry. During this period, the G.D.P.
grew 60 percent as fast as electricity consumption, the highest
recorded level among industrialized nations.
Using those numbers as a guide, if we consider China’s actual
electrical use, which is relatively easy to measure, and do a little
math, we come up with this estimate: The G.D.P. in China has been
growing somewhere between 4.5 percent (using the average for a rapidly
growing country) to 6 percent a year (using the highest rate for
Japan), not at the 10 percent rate claimed in official statistics.
The official statistic for China’s overall growth rate is best
regarded as an approximate growth rate of the economy of its cities.
China also officially claims that it will catch up with the United
States and become the world’s largest economy well before the 22nd
There is an equally simple reason that neither of these predictions is
likely to be realized. 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. One need look only at the history of the United
States, which had a much higher growth rate than Britain in the 19th
century, yet did not catch up until World War I. Or consider Japan and
the United States. Some 150 years after Japan started to modernize
during the Meiji restoration, the country’s per capita G.D.P. is still
only 80 percent of that of the United States in terms of purchasing
power parity â€šÃ„Ã® although, in nominal terms, it has caught up.
The United States is not standing still. In fact, its per capita
income grew faster than nearly all other big countries from 1990 to
2007. Europe’s per capita income fell from 85 percent of that of the
United States in 1990 to 66 percent in 2007, according to International
Monetary Fund statistics.
So let’s say that the inflation-adjusted growth rate for China is 4
percent a year. This is optimistic, because China will certainly have
some bad years in the next century. Every country does â€šÃ„Ã® remember the
Great Depression in the United States. A 4 percent rate is faster than
any big country has ever grown for 100 years. But assume that China can
do it. Assume, too, that America grows at the 3 percent rate it has
averaged for the last 15 years.
Now project the two growth rates forward: the inflation-adjusted per-
capita G.D.P. of China would be less than $40,000 in 2100, versus
almost $650,000 in the United States. That’s because China starts at
$1,000 per capita and the United States at $43,000. If, in 2100, China
has four times as many people as the United States, as it does now,
China would still not have a total G.D.P. equal to America’s.
But it is unlikely to have four times as many people. It is always a
mistake to project population growth rates for a century, but let’s do
it anyway: With a one-child policy and a sex ratio that favors boys
(many men won’t find wives) â€šÃ„Ã® China should experience a decline in
population in the 21st century. Yet let’s assume for a moment that
China’s population remains constant, at 1.3 billion. If immigration to
the United States continued at the current rate, America’s population
would rise. If the population grew at 1 percent a year, as it has
recently, it would more than double by 2100, reducing the enormous
population gap between the two countries. Are these projections likely
to be realized? Who knows?
What is clear is that China is unlikely to surpass the United States
in G.D.P. in absolute or relative terms anytime soon.
There may be a Chinese century, but it will be the 22nd century â€šÃ„Ã® not
Lester Thurow – The New York Times
Copyright The New York Times