Debate on Chinese growth

In: Uncategorized

20 Aug 2007

One of America’s most prominent economists has questioned China’s rapid growth rates. Lester Thurow, a professor at the Massachusetts Institute of Technology, argued in yesterday’s New York Times that China is growing at less than 4% a year rather than the 10% official figure.

He gives three reasons to support his argument:

* Official figures show that the countryside is not growing at all.

* Chinese statistics contradict those from Hong Kong.

* If China’s economy was growing as fast as claimed its electricity use would be growing even faster than it is.

Today Capital Economics, a respected consultancy based in London, put out a paper countering Thurow’s claims. Taking each in turn it argues that:

* Thurow is simply wrong on the rural growth figures.

* There may be some merit in Thurow’s second point.

* Thurow’s point on electricity ignores that fact that China has shifted from a centrally-planned industry to more efficient manufacturing and services.

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