Beginning of the end of the Chinese miracle

From Himal Southasian:

Marcin_chang_piggybank China has the world’s fastest-slowing economy. According to official statistics, gross domestic product skyrocketed a staggering 13.0 percent in 2007. In fact, in all likelihood that figure was even higher, with poor sampling procedures failing to properly take into account the output of small manufacturers, which at the time constituted the most productive part of the economy. Even without that extra bump, however, this put China in the top echelons in terms of economic growth.

Last year, however, the economy tumbled. GDP growth, Beijing tells us, was 10.6 percent in the first quarter, 10.1 percent in the second, 9.0 in the third, and 6.8 percent in the fourth. The decline continued this year, with growth reported as 6.1 percent in the first quarter, the lowest rate since China began issuing quarterly GDP statistics in 1992. The falloff is even more dramatic if we dig a bit beneath these numbers. China’s National Bureau of Statistics reports GDP by comparing a quarter with the corresponding one during the preceding year. If, instead, it compared a quarter to the preceding one – as most countries do – it would have reported essentially no growth during the fourth quarter and, possibly, a contraction. And we have to remember that small manufacturers are suffering more than other producers, so current statistics still do not reflect the real drop-off in output. When other distortions in the statistics – some the result of fakery – are taken into account, it becomes clear that no economy is currently falling faster than China’s.

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