NCPA - National Center for Policy Analysis

Is China an Economic Success?

March 10, 2003

Throughout the world, China is hailed as an economic success story. Companies are flocking to invest there, while other nations are pushing trade deals. Yet despite all the praise, an article in the New Republic argues that China's economy is not as powerful or robust as it appears.

According to the Chinese government, their economy has grown by 7 to 10 percent per year for the past two decades. However, researchers say these numbers don't add up:

  • According to one economist, China has suffered deflation, rising unemployment and declining energy use -- trends normally associated with low economic growth or recession.
  • China's own newspapers are filled with articles about economic stagnation, falling wages and deflation.
  • One estimate has China's economy growing by approximately 4 percent per year, rather than 7 to 10 percent per year.

Economists also argue that many statistics from China are false or inappropriately used:

  • China's State Statistical Bureau stated there were over 60,000 falsifications of provincial economic data.
  • One leading Chinese economist and writer surveyed provincial officials and found their statistical techniques and methodologies lacking or nonexistent.

According to several Chinese economists, China needs more than 7 percent annual growth to keep unemployment rates below 20 percent in rural areas. Insufficient growth could cause rising unemployment that leads to social chaos.

Source: Joshua Kurlantzick, "Asia Minor," The New Republic, December 16, 2002.


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