Thinking about China from Book

Thinking about China from Book-cooking

Peter S. Yao

Apr 1 2002

For recent years, the whole world has been witnessing an awakened tiger--China’s robust economic growth standing among global recessions. However, this admiration meets its end when there’re mounting evidence throughout Western media that China, the largest economy in the Third World, has actually been faking its economics statistics. World gets shocked at such disclosure as Why China Cooks the Books in Newsweek.

As a Chinese citizen who is to devote life to the cause of developing my nation’s economy, I also found such scandals astonishing. Reportedly, 2001 GDP growth is 3% rather than 7.3%, budget deficit being 10% of output rather than 3%, urban unemployment 8.5% rather than 3.6% and defense spending $85 billion rather than $17 billion. What a difference! It seems that China has not performed so well as officials report. It seems that recent violent demonstrations in major cities like Beijing and Shenyang are not anecdotal. It seems that the big tiger actually is still a weak one who hasn’t yet found its correct way to stand up. It seems that the entire world has been cheated for so long by groundless figures only!

Overwhelming. But there’re stories going beyond that. Even if Beijing were interested in accurate, thoroughly transparent statistics, Newsweek says, authorities would not have the means of producing them. There’re various reasons. Interestingly, for some bustling eastern seaboard like Zhejiang province, figures are even underestimating! Similarly, the wealthy Guangdong has reported low-ball figures to avoid some tax payments to the central government. Elsewhere, mostly in poverty, officials tend to inflate numbers to appease Beijing and win support and promotion opportunities from the central government—even more striking!

For years, I constantly put a critic eye on my motherland’s economy, while others praise her growth and brace for the investment there. I think China is a nation dominated by political complexities. Politics, in Mandarin, Guan Chang, reigns over business, public service, even media and methodology, nearly every sector. The corruption is definitely a severe problem and the communist party has already lost its purity and foundation, quoting from CCP’s own documents. Thus, the country is NOT that bright and promising as many foreigners see!

Take Shanghai, my hometown, as an example. Truly, buildings are world-class, infrastructure is of premium quality and the city is rivaling and will surpass any cosmopolis elsewhere. Nevertheless, if you live there as an ordinary citizen--not as Bush during his APEC stay, even for a short while, you’ll find out all the glory is of nothing! Income couldn’t catch up with increasing property prices; services are still so outdated…. What about high GDP growth? Hehe, what figure are you talking about? In a word, you cannot judge Shanghai by its appearance.

I always say that economic statistics of China is servant of politics and is officially utilized. Real problem. It’s associated with the entire system. In short, I’ll pray that the 4^th “core leaders” will conduct more real research in person, rely on accurate situation, not figures, and accomplish the following three critical missions:

First, reduce unemployment. The official rate doesn’t include the huge amount of laid-offs, who are fed by the mere RMB300 monthly allowances---no wonder mass demonstrations! So, providing more jobs and promoting their education level are among imperative schedules.

Second, raise farmers’ income, at least in the short run. 0.7 billion out of 1.3 billion, what a burden to the country! By and by, number of farmers should be cut by educating and putting them in servicing businesses. Technology is also important in cutting farmer’s population.

Third, thoroughly eradicate corruptions and any misbehavior in political circles that hinder markets from running efficiently. If economy is seen as a powerhouse and productivity growth the machines in it, then financial markets are the crucial lubricants.

Professor Stephen Cheung in HKU has already asserted that real economists do not believe in reported figures. I am not the leader, but I must think like an economist. To see and care about China in a comprehensive way, we should still do much more research before being aggressive.