China’s economy a seventh smaller than reported

[jimmy olsen]

That is a big difference

https://www.economist.com/finance-and-economics/2019/03/07/chinas-economy-might-be-nearly-a-seventh-smaller-than-reported

Slower but steadier?
China's economy might be nearly a seventh smaller than reported
A new study examines tax revenues to revise down growth estimates

Mar 7th 2019 | SHANGHAI
For a country that is regularly accused of manipulating its statistics, China is remarkably diligent about collecting them. The government has dispatched two million boffins to visit companies, stores and even street stalls in the first few months of this year, as part of a new national economic census. Ads plastered on billboards implore people to co-operate. In a flashy promotional video on its website, the national statistics bureau warns that any fabrication of data is against the law.

But these laudable efforts do not appear to be solving the basic problems with Chinese statistics. A new paper, by Chang-Tai Hsieh of the University of Chicago and three co-authors from the Chinese University of Hong Kong, finds that industrial output and investment have been consistently embellished. As a result, they argue that China overstated real gdp growth by two percentage points on average every year from 2008 to 2016 (see chart). Over time that adds up: official figures for 2016 would have exaggerated the size of the economy by 16%, or more than $1.5trn.

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[KRonn]

There was an analyst talking about how the Chinese population is imploding and rather quickly, enough to cause alarm among the leaders looking at lack of workers in the near future. For a while I've been also hearing talk of the problems inherent in the Chinese economy. Some real doom and gloom talk which who knows if or how things will pan out but I doubt if it's as bad as some make out. You could point out bad parts of any nation's economy and over state things. We'll see, the Chinese seem to be doing well in so many ways otherwise.

[DGuller]

Is it really that awful to have a shrinking population?  It seems like a first world problem to me.

[mongers]

Which makes their most recent trade surplus* with the US or the more remarkable.


* the one Trump gave so much airtime to.

[The Minsky Moment]

Is it really that awful to have a shrinking population?  It seems like a first world problem to me.

China is aspiring to be first world, so yes it's a problem.

[Monoriu]

Is it really that awful to have a shrinking population?  It seems like a first world problem to me.

It is truly awful. 

1. Most first world countries have shrinking populations after attaining a certain level of economic development.  China isn't there.  At least not yet.  China's problem was artificial.  The birthrate was reduced artificially.  China will be the first major country that suffers from a shrinking population before attaining an equivalent level of economic development as the West. 

2. Traditionally, China relies heavily on kinship for support.  You get sick, you live too long, you suffer from a mishap, you are fired, you want to start a business, etc, you ask your extended family for help.  So there is no need for too much government support.  Someone who retires will expect peer/social pressure to work its magic so that his four kids will support him, so there is no need for social security.  But when that four kids number becomes one kid, and the social security still isn't there, it becomes a huge problem. 

[DGuller]

I don't think pyramid schemes are a good long-term solution either.  If you need population growth at a level far above replacement for your social safety net system to work, then you're just delaying the reckoning.

[Josquius]

The problem isn't lack of workers. There are too many workers given automation.
The problem is a lack of consumers and tax payers.
These are a valuable commodity that has to be secured.

The lack of tax payers can quite logically be fixed by taxing the rich. Since theyre making more via their automated factories they can afford to pay more. We need the international community to stand together on this one.

The lack of consumers however, that is an issue to which there is no obvious solution.

[Grinning_Colossus]

The lack of consumers however, that is an issue to which there is no obvious solution.

UBI. Tax the rich and spread the wealth around so the plebes can buy robot-made goods.

[celedhring]

I'm big in favor of UBI, for several reasons, but I don't think we should aim for a future where we expect people to be unemployed. That's a recipe for disaster, and not merely a financial one.