Well, put away those made-in-China surrender flags:
In a little-noticed mid-summer announcement, 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.
This more accurate picture of China clarifies why Beijing concentrates so heavily on domestic priorities such as growth, public investment, pollution control and poverty reduction. 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.
Why such a large revision in the estimates of China’s economic condition? Until recently, China had never participated in the careful price surveys needed to convert accurately its gross domestic product into PPP dollars.
The World Bank’s estimates based on summary data from the late 1980s probably overstated China’s PPP gross domestic product even then. Up to now, the bank has revised its estimate very little. In the meantime, China has repeatedly raised the prices of food, housing, healthcare and a range of other non-traded goods and services. These reforms should have lowered the PPP adjustment, but the bank left it basically unchanged.
So China isn't the giant once thought? And a quarter of their population lives on less than a dollar a day? Yeah, quake in your sandals, oh nervous ones.
Of course, I've never been all that impressed with China's economic performance and potential to overtake us for global dominance:
I don't think that China will overtake us. At worst, they will become a power that can dominate Asia but they will not gain a global reach. And in Asia, there will be local pillars of power to resist them as well as American power to contain China.
Never count America out. It looks like communist China will definitely grow old before they have a chance to grow rich.
Oh, and if those who say China would never spoil their Olympics by invading Taiwan because the Olympic games are China's opportunity to show off their shiny new economy, what if their economy isn't quite the sparkling gem we've been told it is?
