China Needs Revamped Policy and a New Wave of Technology and Development

A Brookings research paper calculates that from 2008 to 2016, China has been overstating its GDP growth by about 1.7% per year. This would mean that China is now overstating its GDP by 20%. The investment and savings rate in 2016 is 7 percentage points lower than official statistics.

The Brookings economists were using tax receipts and satellite data of lights at night and increase energy production.

A separate report estimates that China’s shadow economy has shrunk to about 5-10%. The shadow economy is where people avoid taxes and hide wealth and income.

If Brookings is correct then China economy is only $11 trillion which is about half the US $21 trillion GDP. China would still be about twice as large as Japan’s economy.

China will need to change many things to get better near-term and long-term growth.

China needs to provide support and bribes to young couples to increase birth rates. The worries about being able to afford more children, education and healthcare need to be removed. A shrinking workforce will reduce the 2050 economy by about 20-30%.

China had 15.2 million births and about 200K-300K IVF births in 2018. By 2025, China should have about 1 million IVF births per year.

Denmark leads the world in IVF rates. 10% of all Denmark births are via IVF. Denmark has socialized medicine and a desperate need for a higher birthrate.

If China matches Denmark’s levels of IVF by 2030, then China would have about 2 million IVF births per year.

SOURCES- Brookings

Written By Brian Wang

40 thoughts on “China Needs Revamped Policy and a New Wave of Technology and Development”

  1. Some of the countries caught in the middle income trap are Asian like Indonesia and Malaysia. South Korea, Singapore, and Japan escape it. I think an emphasis on higher education, high tech, democracy, and less corruption may be the critical factors. Been Asian ain’t enough.

    Reply
  2. It ain’t the entire population. It is the population between 22 and 65 that count minus the number taking care of their elderly parents. And until they show they can escape the income trap I am going to predict they won’t.

    Reply
  3. I know about the prediction but nothing grows forever. In fact the longer the fall takes to happen the deeper the drop will be. For that 3X growth to happen they have to escape the “Middle Income Trap”. Then there is the negative population growth. And the fact that they haven’t had their clocks cleaned in a while so when it comes the people and the government will freak out making things far worse than it should have been.

    Reply
  4. That is not going to happen. We are looking at one more year of 1-2% growth followed by 4 to 10 years of negative growth depending on how much the people and the government freak out when things fall apart.

    Reply
  5. We will see. BTW, nothing goes up forever especially the economy. I remember just months before the crash in 2008 that people were saying that reports of the economy slowing down was BS.

    I will make it easy. If the Chinese economy growth doesn’t go negative in 2 yrs you can send me a nastygram.

    Reply
  6. Humeberttheman or Hermanthehermit? Hard to disagree with unsubstantiated numbers that seem to have come out of some dark, lonely place. Although, it does please me that you tacitly recognize the truth of my first two paragraphs

    There has been some substantial improvement when we don’t consider where it is coming from.

    Unfortunately, it’s kind of like a man who only owns some ragged clothes and a bamboo fishing pole becoming wealthier as he catches a few fish every day, thus becoming able to upgrade his fishing tackle and improve his catch over time.

    The problem being he doesn’t do terribly well at innovating and he’s still going to hit some limits if he can’t innovate past that fishing pole . . . or find fish to catch that are made out of gold, which might also require more innovation than he is willing to support.

    Reply
  7. I have been too optimistic. Chine GDP is about 4 times bigger than India. India’s economy, if we take this report into account, is growing 2% faster than China. Now go figure out, if this trend continues, when India’s economy will supersede China’s and when each of them will supersede the United States. That will tell you which direction the 21st century will take.

    Reply
  8. GDP is an input under the Chinese system. That is to say, Chinese leaders announce to the provinces what GDP is supposed to be, and unleash credit to make it happen. So, comparing Chinese GDP with anything else is just gibberish and nonsensical.

    Reply
  9. China has too many priorities (as do some other countries). They need to pull back and focus as they have plenty of problems to deal with, even without trying to seize control of the world (which probably would never go as well as they could hope, and wouldn’t actually help them all that much).

    China has around 1.3 billion people. Even the UN is predicting only around a billion by 2100. More realistic figures, ones not based on inadequate and antiquated assumptions, indicate a number closer to 560 million (see: Empty Planet: The Shock of Global Population Decline by Darrell Bricker  and John Ibbitson. That’s a full-scale crash and nothing like it has ever happened before. Dealing with that is where their minds should be and covering the South China Sea with missile batteries, and playing with deep water fleets, is probably not going to be of much help.

    As others here have said, they need innovation, and you don’t get that by keeping all the power at the top. Yet everything they do is about keeping the power there, including trying to create their own private internet, because the government of China always rests uneasy with the thought of empowered peasants . . . often with good reason.

    Reply
  10. According to my Chinese co-worker, the Chinese elites are moving their money and children out of China just in case. Many of the older Chinese when thru the Cultural Revolution and are worried about a change in direction so they are playing it safe by moving some of their money out of China. Also many Chinese have opened businesses world wide and are currently living outside of China. This trend will increase as the Chinese economy slows down or as the price of labor increases in China.

    Reply
  11. Yah, MIT is developing bioluminescent plants. There is even talk about doing it with trees to reduce dependency on street lights. Time travelers from the past would be soooo freaked out.

    Reply
  12. Your vast generalization is so full of counter examples that I don’t even feel like typing them out. Jesus, have you ever been to China, or even left your trailer park this year?

    I would guess not, because your logic is stuck in the 70’s…

    Reply
  13. China needs a lot of help to truly catch up. Hell, you can kill 10% of their population with a conventional strike on the Three Gorges Dam. They have so much vulnerability and have almost no military presence more than 1000 km from their borders. A few well placed, non-nuclear munitions kills 200 million in China without much effort. You cannot pull a stunt like that in the US, maybe you get 1 million conventionally, if you can get anywhere close without an ICBM or a Doolittle type raid. The benefit of dominating an continent. Geography matters, die, then ask uncle Adolf how geography treated him.

    Reply
  14. I think that the price of housing (and its variations) should be a better indicator, at least for developed countries. I dont think there are less lights on in Spain than in Switzerland.

    Reply
  15. I don’t think your comparison makes sense. Even Russia’s economy is not really planned, it is just planned to fit very corrupt elements.

    Reply
  16. Light spilled upwards is wasted energy. It means that much of the world’s population these days never gets a good view of the stars – we have tourists coming to New Zealand just to see the Milky Way. Light pollution also threatens all sorts of creatures that have evolved to navigate by natural light -fireflies, turtles, moths, monarch butterflies..https://www.bbc.co.uk/programmes/w3csx37g

    Reply
  17. For a good look at what inflation, unemployment etc. would be like without all the modern manipulation, see http://www.shadowstats.com/alternate_data
    Hint: all of these things are much worse than officially acknowledged. All governments manipulate their data to either make themselves look better, or, in the case of the U.S. to understate inflation to suppress the COLA adjustments to Social Security.

    Reply
  18. China needs to relax and focus on well being of its people and give them more freedom. Overtaking US is not happening, it’s just reality they need to accept.

    Reply
  19. There has been, AFAIK, a number of people who sat down to try to disprove the standard USGov inflation figures. Not just amateurs but respected economists and the like.

    They choose different approaches, but based on my (extremely limited) reading they never end up showing numbers that are significantly different from the official numbers.

    Reply
  20. China dominates a global ranking of the most-cited research papers published in the 30 hottest technology fields, a development likely to alarm American leadership already leery of its rising Asian rival. Though the U.S. accounted for 3.9 million research papers overall compared with 2.9 million from China, the Asian country produced the largest share in 23 of the 30 fields that drew the most interest, while America took the crown for the remaining seven. Nikkei and Elsevier compiled the ranking based on 2013-18 data provided by the Dutch publisher, covering a total of 17.2 million papers. China led the world in the majority of the top 10 fields, and each of the five areas in the top 10 tied to battery research. It accounted for more than 70% of all papers on photocatalysts and nucleic-acid-targeted cancer treatment, which ranked 12th and 14th.

    Reply
  21. According to the Japan Science and Technology Agency, China now ranks as the most influential country in four of eight core scientific fields, tying with the U.S. The agency took the top 10% of the most referenced studies in each field, and determined the number of authors who were affiliated with the U.S., the U.K., Germany, France, China or Japan. China ranked first in computer science, mathematics, materials science and engineering. The U.S., on the other hand, led the way in physics, environmental and earth sciences, basic life science and clinical medicine. https://tinyurl.com/ydeqeqnb.

    Reply
  22. The US does all sorts of crazy things to inflate the GDP. For instance, if you own your home, the feds add what it would cost to rent it from yourself to the GDP. Price inflation is purposely understated, which inflates GDP. I’d be amazed if all the gimmicks didn’t add an additional 2 or 3% annually to the GDP of the US.

    Reply
  23. To obtain an economy with significant innovation, there must be decentralization on all levels of the PRC, and government officials must prioritize enabling entrepreneurs. Industries must have multiple competitors, and artificial barriers to entry must be dismantled. In other words, all the people, and institutions that make crooked politicians wealthy must be done away with, or change the way they do business.
    The Chinese economy would be transformed into a vast, wonderful, productive, marketplace of ideas, goods, and services, looking to the future, that would be completely uncontrollable, and unpredictable.
    It would become just like that other Chinese economy across the straits of Taiwan, but an order of magnitude larger. Just like that economy, it would be unacceptable to the politburo, and the Communist party.
    I don’t think the PRC “leadership” is ready for a non-command economy. Most American politicians aren’t either.

    Reply
  24. You just can’t innovate from the top down. Those obsessed with stability will not allow innovation, even if they themselves believe they want it. Anything truly innovative will be disruptive to the existing order. By definition, all progress is the result of the efforts of malcontents. If someone is content with the status quo, he will not risk career, fortune, and reputation to pursue radical change.
    If there is one thing that politicians, and management of large corporations hate, it’s highly intelligent, solution oriented malcontents. Those guys are nothing but trouble for those on top of the pile.

    Reply
  25. GDP is mostly nonsense anyway. You can fake it by government spending. Let’s ask a different question. What’s the point of the economy anyway? It is to provide goods and services for the people so that they’ll live better. To increase productivity so we have more leisure time because we can produce the same goods using less resources and time. You can provide good to your people (as a country) via your own internal industry (China’s model) while blocking external competition so that it can grow without being threatened. Or you can go the way favored by developed countries with powerful industries and globalists, and just become a colony and exchange your cheap labor for goods produced elsewhere. China has chosen the 1st way, it is a very hard way, because for industry you need to have smart educated people like engineers, scientists etc.. who will figure how to produce goods from raw materials. And it has mostly succeeded, ie it can produce goods internally and is mostly independent, it has the know how to make things and that’s important. The problem is that Chinese goods are still inferior in quality to their Western counterparts so much so that even many Chinese consumers actually prefer Western goods. Also Chinese brands are generally nowhere to be seen outside of China, except smartphones, drones and telecommunications equipment. All of that can be fixed of course, like Japan and Korea did, but it won’t be easy. Global economy is a zero sum game to some extent.

    Reply
  26. Though to some extent that’s the point. If your economy is growing at 6%, and you claim it is 7.7%, then it takes a while before the incongruities add up to the point where it’s obvious you are shading the figures.

    If your economy is growing at 0.5% (Hi Japan!) and you claim it is 2.2% (same 1.7% difference) , well that seems pretty obvious straight away. An economy with 0.5% growth just looks slow and morbid, and it’s qualitatively different from a 2.2% economy.

    Reply
  27. Nope. Just demonstrating same thing. Only difference is degree.

    I used Venezuela instead North Korea because Venezuela once was one of the wealthiest Latin American nations that had the lights on at night in Caracas every night.

    Either way, satellite data does not lie.

    Reply
  28. India will supersede China probably in 15 years as the world second biggest economy. China effort to become a super power with the new silk road, the aggression toward its neighbors to the East and south and planned economy will only backfire. America and Britain Vs. Russia, Germany and Japan have shown that in the modern age you cannot become a super power without an economy that have reached a certain level of supremacy.

    Reply

Leave a Comment