GDP misleads on China and the US
- By Derek Scissors
0 Comment(s)
Print
E-mail China.org.cn, October 29, 2014
Chinese public wealth is more difficult to grasp, as the value of state assets is often considered a matter of national security. The bulk is held by the State-Owned Assets Supervision and Administration Commission. The gross value was about $14 trillion as of mid-2014 (based on previous figures and approximate growth rates). Other state assets could add $4 trillion to that.
Chinese local government and state corporate debt is also sizable, perhaps $11 trillion, and rising quickly. Net Chinese public wealth is therefore positive and exceeds $5 trillion, though it may no longer exceed $10 trillion. Credit Suisse’s private wealth gap thus exaggerates the true distance between the U.S. and China. Rather than $62 trillion, it’s closer to $40-$45 trillion.
Trend matters
No reasonable person, certainly including Chinese experts, believes that ranking first on the doubly artificial GDP PPP scale is worth $40+ trillion in additional wealth. The U.S. is not only ahead of China, it is far ahead.
Unlike the Bank and the Fund, the Chinese government is well aware of this. The Communist Party’s third plenary meetings last fall touted the absolute necessity of sweeping reform. And broad, market-oriented reform would indeed trigger another full generation of wealth increases in China.
The key, then, is turning reform talk into powerful action. This has not yet happened, perhaps because the anti-corruption campaign must be completed first. But unless it does, and for an extended period, China will not repeat the rapid, sustainable growth of 15 years ago. And the U.S. will remain clearly dominant economically.
This article was first published at Chinausfocus.com. To see the original version please visit http://www.chinausfocus.com/finance-economy/gdp-misleads-on-china-and-the-us/
Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.
Go to Forum >>0 Comment(s)