Zachary Karabell: China’s Growth Is Real
American coverage of the Chinese economy is like that of a weatherman who routinely begins forecast of sunny weather in the mid-70s by saying that because it didn’t rain today, there will be a deluge soon. Meanwhile, when U.S. figures are released in a few weeks showing perhaps 3% growth based entirely on a weak dollar and inventory growth, many will hail the domestic recovery. But the fact remains that right now China, not the U.S., is the dynamic economy pulling the world along in its wake.
China has maintained a high level of growth for the past decade, and in many respects, for the past 20 years. While there’s ample reason to be skeptical of the smoothness of Chinese official data that have rarely dipped below 7% growth and rarely exceeded 10%, if anything the official figures understate the success of the Chinese model. With as many of 800 million people still living in rural poverty, China’s growth is the product of urban areas, many of which have been growing in the range of 15% for the past decade. That includes obvious examples such as Shanghai and less obvious but equally important interior cities such as Chongqing.
While the peculiar formula that China has adopted violates Western views about what constitutes the “right way” to grow, there can be no gainsaying the fact that China’s recipe has proved more stable and successful than any of the orthodoxies propagated by the World Bank, by development economists and by countless economists today who continue to critique China as too dependent on state spending and “fixed asset investment” (i.e., infrastructure) and not enough on spending by consumers.
See also: “China Vice Premier: Economy’s Rebound Has Become Firmer” and “China’s Vice Premier Li Keqiang says country’s economic growth will speed up” from The Telegraph.