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1. A stagnant China in 2040, briefly

Author:
Derek Scissors
Publication Date:
03-2020
Content Type:
Special Report
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
There is a considerable chance China will stagnate by 2040, with gross domestic product growth at 1–1.5 percent. The process has started, seen most clearly in stark trends for debt and aging, but better-quality data on productivity would clarify how far along stagnation is and whether it at some point reverses. China shows no sign of adopting pro-productivity reform. It will not spur growth by leveraging or bolster a shrinking labor force through current population and education policy. Innovation will help, but a large economy requires broad innovation, and the party dislikes competition. A twist comes from China’s global position, which will not deteriorate much. Outbound investment has retrenched, and the yuan’s rise was exaggerated. Consumption exports and commodities imports will stall. But China will easily be a top-two market in most sectors, and other countries are not acting to displace it. Instead, localization will occur. Commodities producers and some developing countries will lose, the latter as Chinese capital dries up. Countries that make difficult reforms will win. Consumer goods will see inflation, but innovation will be healthier with less Chinese influence. American firms will seek new pastures, and Chinese stagnation means production may relocate to the US.
Topic:
Foreign Policy, Defense Policy, GDP, and Economic growth
Political Geography:
China and Asia

2. How to evaluate China’s economy

Author:
Derek Scissors
Publication Date:
01-2019
Content Type:
Special Report
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Official Chinese economic data are often the only game in town, but they are untrust­worthy. Sometimes they prove inaccurate; during downturns they are falsified outright. Finding inconsistency in official statistics demonstrates the problem but offers no solution, since it is rarely clear which series is better. Examining 15 major indicators for importance and reliability shows that growth in gross domestic product (GDP) and GDP per capita should be deemphasized. To illustrate, China’s GDP per capita is twice as high as official per capita disposable income. The latter can be spent; the former is an accounting result. Another conclusion: Arguably the most valuable indicators are the worst measured. Debt is reasonably estimated at present, but factor productivity and human capital are vital to medium-term performance and receive far too little attention.
Topic:
Foreign Policy, Monetary Policy, GDP, and Economy
Political Geography:
China, Europe, and Beijing