Friday, June 22, 2018

Shining the Light on China

Satellite photo analysis--especially of visible light--is providing a way to check officially released economic statistics. China is just one of the states that this can be applied to:

This research is most meaningful for China, which now has the second largest GDP in the world. There are enough verifiable statistics (especially when it comes to foreign trade and international banking activity) to verify that China now has a huge, and probably second only to the United States, economy. But accurate data on annual GDP growth is crucial in determining the health of the Chinese economy and what vulnerabilities it has.

For example, Chinese GDP growth has been slowing since 2010 and that trend will continue. The question is how much of the GDP growth, especially as it is declining, is accurate. For China, the slowdown is mostly about how the decades of development are over. Most of the missing (because China did not go through the Industrial Revolution until the late 20th century) infrastructure (road, ports, dams, utilities, housing) have now been built. Another major factor is government corruption which often leads to unneeded infrastructure projects that are often poorly built. ...

The Chinese government was forced to admit that the decades of 10 percent a year GDP growth were over and appears to have settled on 6-7 percent a year being the acceptable new normal. But foreign analysts see five percent or (and eventually) less as the reality and a catastrophic economic collapse (because of mismanagement of the banking system) still a possibility.

China has achieved real growth and has lifted a lot of people from dire poverty. But most have not benefited from this growth (and fixing the lagging status of interior provinces is one major reason for the One Belt One Road "New Silk Road" project).

But that massive growth was really done by the means that the Soviet Union used to achieve its early massive economic growth that so impressed gullible Western fanboys (and girls)--China moved peasants into low-tech factories.

And as I've noted many times, when you put the most efficient peasant into even the most inefficient factory (or construction site for that infrastructure), you get a massive increase in GDP.

But that method of achieving growth is pretty much over as other states start to pick up the low-wage manufacturing role, even taking some from China. China is in a better position than the Soviet Union was to move up the quality and tech scale for added value in their economy; but has farther to go given the massive size of the still-very poor part of the Chinese population.

I wouldn't rule out that "China" will ultimately be a geographic rather than a political term. The Chinese civilization is ancient. But unified political rule of all that territory and all those people hasn't been continuous.