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Dec 10, 2007

China Shrinks

Interesting NYT article today about a re-evaluation of Chinese Purchasing Power Parity.

Few people noticed, but China got smaller the other day. According to new
estimates, the colossal Chinese economy that has been making marketers salivate
and giving others an inferiority complex may be roughly 40 percent smaller than
previously thought: worth $6 trillion rather than $10 trillion. That means it
lost a chunk roughly the size of Japan’s output....

This is not a mere technicality. Suddenly the number of Chinese who live
below the World Bank’s poverty line of a dollar a day jumped from about 100
million to 300 million, roughly the size of the United States population. And if
you thought China’s energy consumption was dismally inefficient, consider that
it still uses the same amount of energy to produce 40 percent less stuff. The
reassessment does not just involve China. India is also likely to be downsized.
And, by the way, global growth has very likely been slower than we

You can read the whole thing here.

1 comment:

Michael Turton said...

I think the comment about efficiency is all wrong. The amount of stuff China produces remains the same whether you calculate its value by PPP, GDP, GNP, etc. My factory in Guangdong churns out 40,000 pairs of shoes a month no matter what currency their value is measured by. Hence, while energy efficiency per unit of purchasing power is certainly worse, energy efficiency per unit of good produced is unchanged.