Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

China’s Economic Growth Looks Strong, Maybe Too Strong

nytimes.com

Post reply on HN
Print view View original

11–20 of 74 posts

Re: China’s Economic Growth Looks Strong, Maybe Too Strong

#11

Post by digi_owl »

gthtjtkt wrote: post #2

There's an economist from Tsinghua University named Patrick Chovanec who used to do an amazing job of documenting China's explosive growth and the many ways in which it might have been artificially inflated (easy credit, shadow banking, fudged numbers, empty skyscrapers, etc.). His blog is still up, but unfortunately he switched from blogging to Tweeting in 2013 and it's been impossible to follow his train of thought…

About those empty skyscrapers i think in part they are a gamble on workers migrating from the interior to the coast.

But in recent years their government has started a program aimed at transferring some of the coastal activity inland.

How effective that will be is hard to tell, but there are already interesting stories of hotels that have entrances on multiple floors because the city was funded in a valley between multiple hills. End result is that new roads go between the hills on bridges, passing right by the hotel. Sounds like one crazy place to live.

Re: China’s Economic Growth Looks Strong, Maybe Too Strong

#12

Post by digi_owl »

oblio wrote: post #5
gthtjtkt wrote: post #2

There's an economist from Tsinghua University named Patrick Chovanec who used to do an amazing job of documenting China's explosive growth and the many ways in which it might have been artificially inflated (easy credit, shadow banking, fudged numbers, empty skyscrapers, etc.). His blog is still up, but unfortunately he switched from blogging to Tweeting in 2013 and it's been impossible to follow his train of thought…

My guess is that China is inflating its numbers, but even so, the growth they've had is impressive and a lot of it is real. And even with further inflation of their numbers, I don't think they will be a paper tiger with nukes, like the USSR was.

I can't help wonder if China is what the USSR could have been had not the hardliners come after Gorbachev, leading to turmoil and dissolution of the union.

Re: China’s Economic Growth Looks Strong, Maybe Too Strong

#13

Post by dragonwriter »

contingencies wrote: post #10
Symmetry wrote: post #8

Earlier quoted context omitted.

I think the OP might have been misunderstanding a thing that actually happens. Because officials are graded on whether they hit targets or not but they don't get extra points for exceeding them they have an incentive to under-report growth in good years so that a return to accurate reporting in bad years lets them still report growth. So there will be a combination of over and under-reporting of growth at different t…

... except top-level officials are constantly shuffled between posts in different cities/provinces they have no family ties to specifically to prevent such corruption.

That only actually prevents it if:

(1) rotations are most often exactly one of the periods on which goals and evaluations occur (that is, understating growth that at least meets the goal never is expected to help you by making it more likely you can plausibly claim to meet a growth goal the next period), and

(2) the rotating top-level officials have some other structursl disincentive to form a class identity and class norms (stack ranking where the top slice promotes into a national administration group and the bottom slice is demoted out of regional leadership, while the middle group remains, for instance, would do this, since everyone would have a strong incentive to make everyone else's results relatively worse; OTOH, this incentivizes an opposite kind of misreporting, so it's not really a solution.)

Re: China’s Economic Growth Looks Strong, Maybe Too Strong

#14

Post by propman »

I read a while back that local governments would significantly artificially inflate their manufacturing, construction, spending, and raw materials numbers. There were dozens that seemed so far fetched they were easily spotted as fake by a professor that did little research.

When you have govt officials who are forced to increase growth and you'll look bad/fired if you don't and no authority is safeguarding this, then these actions seem fairly logical.

Interesting to see how perception is sometimes as good as reality.

Re: China’s Economic Growth Looks Strong, Maybe Too Strong

#15

Post by beat »

propman wrote: post #14

I read a while back that local governments would significantly artificially inflate their manufacturing, construction, spending, and raw materials numbers. There were dozens that seemed so far fetched they were easily spotted as fake by a professor that did little research. When you have govt officials who are forced to increase growth and you'll look bad/fired if you don't and no authority is safeguarding this, then…

This is, of course, completely different from the performance figures of departments in large corporations, because... um.

Re: China’s Economic Growth Looks Strong, Maybe Too Strong

#16

Post by gwern »

oblio wrote: post #5
gthtjtkt wrote: post #2

There's an economist from Tsinghua University named Patrick Chovanec who used to do an amazing job of documenting China's explosive growth and the many ways in which it might have been artificially inflated (easy credit, shadow banking, fudged numbers, empty skyscrapers, etc.). His blog is still up, but unfortunately he switched from blogging to Tweeting in 2013 and it's been impossible to follow his train of thought…

My guess is that China is inflating its numbers, but even so, the growth they've had is impressive and a lot of it is real. And even with further inflation of their numbers, I don't think they will be a paper tiger with nukes, like the USSR was.

They can only systematically inflate a little bit. By the exponential nature of economic growth, if you overestimate the annual 8% by, say, 2% for a decade, by the end that results in a huge absolute gap between the nominal and real GDP. But the estimates from other methods or just going to China show that the official estimate is fairly reasonable, certainly not off by 10x or anything. Which supports the smoothing interpretation: they do fiddle the numbers a lot each year but in different directions and so the net is minimal.

Re: China’s Economic Growth Looks Strong, Maybe Too Strong

#17

Post by seanmcdirmid »

oblio wrote: post #5
gthtjtkt wrote: post #2

There's an economist from Tsinghua University named Patrick Chovanec who used to do an amazing job of documenting China's explosive growth and the many ways in which it might have been artificially inflated (easy credit, shadow banking, fudged numbers, empty skyscrapers, etc.). His blog is still up, but unfortunately he switched from blogging to Tweeting in 2013 and it's been impossible to follow his train of thought…

My guess is that China is inflating its numbers, but even so, the growth they've had is impressive and a lot of it is real. And even with further inflation of their numbers, I don't think they will be a paper tiger with nukes, like the USSR was.

Much of it is real, China's growth has been outstanding! Then you encounter the occasional ghost mall or notice that many of the apartments in your complex are empty and wonder a bit about how much of it is real (probably a lot) and how much of it is just a bubble (probably a significant portion also).

A lot of China's GDP growth is tied up in asset growth (e.g. appreciated real estate). So if/when that bubble pops, they will take a hit. Accordingly, in the Chinese news, they talk about supporting and nurturing what they call the "real economy" as a counter to that danger.

Re: China’s Economic Growth Looks Strong, Maybe Too Strong

#18

Post by colemannugent »

beat wrote: post #15
propman wrote: post #14

I read a while back that local governments would significantly artificially inflate their manufacturing, construction, spending, and raw materials numbers. There were dozens that seemed so far fetched they were easily spotted as fake by a professor that did little research. When you have govt officials who are forced to increase growth and you'll look bad/fired if you don't and no authority is safeguarding this, then…

This is, of course, completely different from the performance figures of departments in large corporations, because... um.

The parent never implies that it is.

However, at the end of the day large corporations need to keep shareholders pleased to survive. They could lie all they want to themselves, but the shareholders would see through that and remove the bad administrators.

China has no such mechanism to ensure accountability.

Re: China’s Economic Growth Looks Strong, Maybe Too Strong

#19

Post by seanmcdirmid »

melling wrote: post #7

By some measures China has already passed the United States: https://www.bloomberg.com/view/articles/2017-10-18/who-has-t... China, and eventually India, matching the United States will hopefully help increase R&D. For example: - Solar energy prices have dropped significantly because of China's investment. - Nuclear energy is dead in the US but lives in China. - AI - China will match the US, accelerating development…

Only in PPP, which doesn't mean much because many things are more expensive in China than the USA (housing, cars, high-end goods, schooling, ...). For an equivalent lifestyle, you often need to earn more in China than the USA, so PPP seems to be a weird metric.

- Solar is suspected to be heavily subsidized by the government. That isn't so bad for us as long as we don't produce panels, it has led to a solar revolution in the USA as well.

- China still hasn't done its own production nuclear plant yet. Citizens are extremely wary of the government to do it right.

- The point here is "will" rather than "does". China keeps touting how they will beat the USA in AI by 2020 or 2030 or whatever, but it is still all aspirational. China has a lot of talent and a lot of data work with (privacy isn't much of a concern), but claiming you are going to win a race is much different from winning it.

Re: China’s Economic Growth Looks Strong, Maybe Too Strong

#20

Post by ansible »

beat wrote: post #15
propman wrote: post #14

I read a while back that local governments would significantly artificially inflate their manufacturing, construction, spending, and raw materials numbers. There were dozens that seemed so far fetched they were easily spotted as fake by a professor that did little research. When you have govt officials who are forced to increase growth and you'll look bad/fired if you don't and no authority is safeguarding this, then…

This is, of course, completely different from the performance figures of departments in large corporations, because... um.

And this is why we have (nominally independent) external auditors for corporations.

Cooking the books is maladaptive in the long run, and needs to be discouraged at every level.

Post reply on HN