China: The temporary nature of what we know

In a little-noticed mid-summer announcement, the Asian Development Bank presented official survey results indicating China’s economy is smaller and poorer than established estimates say. The announcement cited the first authoritative measure of China’s size using purchasing power parity methods. The results tell us that when the World Bank announces its expected PPP data revisions later this year, China’s economy will turn out to be 40 per cent smaller than previously stated.This more accurate picture of China clarifies why Beijing concentrates so heavily on domestic priorities such as growth, public investment, pollution control and poverty reduction. The number of people in China living below the World Bank’s dollar-a-day poverty line is 300m - three times larger than currently estimated.

Heh, I would call that a pretty substantial revision. Tyler Cowen says it best:


Some thoughts on some policy implications:

These calculations are not just esoteric academic tweaks. Based on the old estimates, the US Government Accountability Office reported this year that China’s economy in PPP terms would be larger than the US by as early as 2012. Such reports raise alarms in security circles about China’s ability to build a defence establishment to challenge America’s.


Well-informed analysts know that PPP calculations are a poor measure of a country’s potential military base, but with the corrected China PPP statistics, the whole question is moot. China is just not that big now and will not get that big any time soon.


It means that the US and other developed nations have more time to engage China and interact with its fledgling institutions. There might be no better place to start than with military-to-military relations.


risks to its impoverished rural hinterland from a sudden large revaluation of its currency loom larger in Beijing’s eyes than in Washington’s. Acknowledging this could smooth negotiations.

Of course, maybe I should consider it an opportunity. We neo-con warmongers now know we can take those guys. Why stop at getting our jollies in the Middle East?

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3 Responses to “China: The temporary nature of what we know”

  1. on 16 Nov 2007 at 5:20 pm Joshua Foust

    This is interesting. I was at an off-the-record discussion with a senior fellow from a major think tank about China, and I asked about this. It didn’t seem to change his stance, which is that China’s rise is a cause for alarm and not historically unique in terms of changing great power relationships. I have to say: his argument was pretty persuasive, though I’m unsure how much I could reference without violating the “non-attribution, off-the-record” thing (I seriously don’t have the time to find independent sourcing for everything, though I know it exists and is unclassified).

  2. on 16 Nov 2007 at 5:40 pm Lance

    I can see reasons for alarm, and optimism. I am not sure if you are alarmed it should change your stance, but it might make you adjust some timetables.

    Since it is just an opinion, I don’t think relating it as grist for discussion in the comments is an issue. We can take it for what it is, and look up sources ourselves. We could make it a group project;^)

  3. on 16 Nov 2007 at 6:23 pm Joshua Foust

    Okay, then - let’s discuss whether or not China is behaving like a traditional rising power, and if all of its heavy research and development into “anti-access” technology meant to stymie our Navy is a big deal or not. Concurrently, is China’s enormous push for basing and power influence throughout Latin America and Africa cause for worry and alarm in terms of them displacing us as the world’s primary power mover, or is it cause for relief so we won’t have to shoulder that burden?

    I could go on :-)

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