Friday, 2 May 2014

China, Statistics and Perceptions

Very interesting article in today's Financial Times (May 2, 2014) on the Chinese sensitivities of being the top economic power.

China tried to undermine economic report showing its ascendancy
By Jamil Anderlini in Beijing and David Pilling in Hong KongAuthor alerts

China fought for a year to undermine new data showing it is poised to usurp the US as the world’s biggest economy in 2014 based on purchasing power, according to people who helped compile the report.

The report, released this week by the International Comparison Programme under the auspices of the World Bank, included a line stating that the “National Bureau of Statistics of China has expressed reservations about some aspects of the methodology”. Beijing has declined to publish the headline number for China and the report said that the NBS “does not endorse the results as official statistics”.

But, according to those involved in compiling the data, China’s distaste for the findings went further.

“A year ago, there was a huge debate. China wanted to throw this out. They don’t want to be seen as number one. They’re worried about the political implications with the US,” said one person involved in preparing the report. “They begged and threatened for a whole year . . . China hates it,” he said.

The main reason for China’s lack of triumphalism is that leaders do not want exposure to the international pressure that comes with being the world’s largest economy, according to people familiar with Chinese official views on the matter.

“They certainly don’t want to overstate the size of their economy. They are sensitive about that,” said Vinod Thomas, director-general of independent evaluation at the Asian Development Bank, which played a role in compiling Chinese statistics for the report. “The pushback and sensitivity has been muted publicly but, behind the scenes, it’s been there for sure.”

China’s tightly controlled state media did not mention the latest estimates, which were widely reported outside the country. Beijing has often balked at international estimates showing it has taken the global lead in everything from carbon emissions to energy use.

Taking the title as the world’s largest economy, held by the US since 1872, might be seen as a crowning achievement after three decades of rapid economic growth. However, China’s leaders are wary of the added international responsibility that could come with it.

“On a per-capita basis, China is still a very poor country so it does not want to be asked to do too much on the international stage – at least not yet,” said an adviser to senior Chinese policy makers.

At current exchange rates and projected growth rates, China is expected to overtake the US in real terms in about a decade but, even then, the country’s 1.36bn people will, on average, be relatively poor.

According to the latest ICP report, in per capita purchasing power terms China ranks just 99th in the world, while the US ranks 12th.

Copyright The Financial Times Limited 2014.