May 30, 2012
In today’s on-line The Diplomat, Dr. Minxin Pei at the Claremont McKenna College notes the most recent fall in China’s GDP growth to 8.1%. According to Professor Pei, this drop below the prior 8.3% growth “means lower demand” in China, causing worsened future performance.
There is another view, which notes that the Chinese government’s forecast was for 7.5% growth, so the actual performance beat official expectations. How is that a negative? Furthermore, there is no other major economy in the world that is performing at China’s 8.1%. Even Germany, the growth champion of Europe, is utterly stagnant at .5% growth last month, which means that China’s economy is growing sixteen times the rate of Germany’s. China’s economy is growing four times faster than the U.S. Again, how is that a negative?
Not that there are not plenty of long-term, systemic problems in China’s economy. The SOE’s are rife with corruption and inefficiency, the banks are worse, and the economic model of market-Marxism or controlled-capitalism that the Chinese practice cannot endure, because there are so many internal contradictions. Still, the present growth is stellar despite all of the systemic problems. The Chinese can gaze out at Europe’s and America’s economic problems and give thanks they have theirs, not ours.
Dr. Pei’s critique is valuable for pointing out the many problems in China, but their fall in growth rate is not a problem, except to those whose views are colored by the personal psychology of Pessimism.[Email comments are welcome: duoism(at)sbcglobal.net]