Arnold Kling

China's Growth Overstated?

Arnold Kling, Great Questions of Economics
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According to an article in The New Republic, China's is not growing as quickly as official figures suggest. The article cites economist Thomas Rawski, among others.

Rawski concludes that, between 1998 and 2001, China grew by approximately 4 percent rather than the 7 percent to 10 percent claimed by the government...

The government auditing body has admitted that more than two-thirds of the biggest Chinese companies falsify their accounting...In many cases, corrupt Chinese managers have used funds stolen from SOEs [state-owned enterprises] to build enormous, virtually useless buildings on China's eastern seaboard as showpieces of their newfound wealth. Parts of Pudong, Shanghai's newest commercial district, look like a ghost town. ...gleaming buildings that, having drawn no tenants, were just empty shells staffed by guards who spent their time alternating between marching in circles and conducting spitting contests.

Discussion Question. Should American businesses be in a hurry to invest in China?

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