China’s Low-Profit Growth Model – Weijian Shan

 Articles1 2006 0611 Images Shan From The Far Eastern Economic Review:

The United Nations Population and Demographics Office reports that the average height of adult Chinese women has reached 170 centimeters, up from 159 centimeters in just about 25 years. On average, adult Chinese women are about four centimeters taller than American women.

According to an opinion poll conducted on a group of American, European and Asian professionals who either have lived in or have visited both China and America, 97% attribute the height growth to “better nutrition in the Chinese diet” or other factors such as the increase in interracial marriages as a result of China’s open door policy. Only 3% of the polled suspect anything wrong with the data.

I apologize to the respondents that I, the pollster, made up the Chinese height statistics and the UNPDO does not exist. But I thank them for helping me confirm a hypothesis: People generally do not question statistics from what seem like authoritative sources, such as the U.N., no matter how implausible the information is.

…… China has embarked on major banking reforms and meaningful progress has been made. But the economy’s growth continues to be driven by excessive liquidity, and so is costly and inefficient. Improving profitability, returns and efficiency remains the highest priority. While China is on the right track in her search for a cure, the last thing she needs is someone in a doctor’s white gown to come along to tell her she is in excellent health. Fortunately, the leadership knows better. The policy of the central bank to raise interest rates, mop up excess liquidity, curtail lending to overheated industries and generally increase the cost of capital is correct and necessary for sustained growth in the long term. [Full Text]

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