Why is it thought that Chinese economic growth is even higher than official figures?

Godfree Roberts

 

Ed.D. in Education & Geopolitics, University of Massachusetts, Amherst (Graduated 1973)

Originally Answered: Why is it thought that Chinese economic growth is even higher than official figures? The figure put out by the Chinese government is 6.9%, but many economists estimate a figure a few percentage points higher than that. Why does China hide strength?

There are several reasons why some people think that Chinese economic growth is even higher than the official figure:

1. It’s certainly no smaller than the official figure, as the U.S. Federal Reserve report, On the Reliability of Chinese Output Figures, concludes, “Alternative domestic and foreign sources provide no evidence that China’s economic growth is slower than official data indicate”.
2. China has had a stated policy of hiding her strength and biding her time until she is no longer subject to international bullying. Understating GDP figures helps achieve that aim. Economist Joseph Stieglitz reported that, at one IMF meeting, the Chinese delegation threatened to walk out if the Fund published figures showing that China’s GDP is higher than the official figures.
3. China excludes from GDP calculations fifty million live-in nurses, babysitters, cleaners, cooks and tutors, and women selling jianbing snacks curbside in Beijing who clear $600 a day. It doesn’t count shadow banks either, or a million Uber/Didi drivers, or a hundred million small vendors on Taobao, the six hundred billion dollar e-market. And outside Beijing and Shanghai, all transactions–including automobile and real estate purchases–are conducted in cash by people who’ve been avoiding taxes for two thousand years.
4. In Broken Abacus?
   Washington’s Center for Strategic and International Studies calculated that China's economy is fifteen percent larger than official figures.
5. In their analysis, Is China Already Number One? New GDP Estimates, the Peterson Institute of International Economics went further, estimating[1] that it’s twenty-seven percent bigger and on track for $29 trillion in 2020: fifty percent larger than America’s.

How much has the economy directly benefited ordinary Chinese? In 2006, average annual wages were $5,000; in 2016 average wages were $18,000. Every Chinese real wages have doubled every ten years since 1980 and, by 2020, the country will have fewer poor, malnourished, homeless, and imprisoned people than America and, simultaneously, three times more middle-class and rich ones.