Today is April Fools’ Day, when newspapers often publish hoax stories. Longtime readers of WiC will recall that we took the opportunity to publish an edition themed around the April Fool tradition five years ago. We included a series of very strange stories about China and asked readers to guess which of them we had faked. The more bizarre articles included a city in Anhui that had opened a hotel shaped like a ping-pong paddle (“the perfect architectural shape for a hotel” a local official claimed), news of a 3D porn film (called Sex and Zen: Extreme Ecstasy) and a report about how rich adults were drinking human breast milk (for its alleged health benefits).
However, our actual hoax story was about China National Chemical and Gas Export, a company that we had invented. We said that it had opened a factory in Scotland (in the town of Corrievorrie, also fictional) to bottle pure Scottish air. The idea was to sell it to high-end apartment complexes in Beijing, who would pipe it through their air-con units to combat the city’s chronic pollution. The company’s sales pitch was “drink Chateau Lafite, breathe Scottish air”.
That all seemed farcical enough until an entrepreneur in China began selling cans of fresh air two years later – albeit from “pristine Tibet” rather than Scotland (see WiC183).
Nothing, we concluded, was too strange to be true in modern-day China. And with this in mind, we haven’t run an April Fools’ hoax in this issue, for fear it might become a reality likewise.
I know that a number of commentators in the international media regard China’s official statistics as a bit of a hoax too, but with that proviso, I feel the journalist community has been a little slack in its language about China’s economy in recent months. What I am especially getting at is widespread use of the phrase “China’s slowing economy”.
The chart (above right) shows just how many trillions of renminbi have been added to China’s GDP over the past decade or so. Aside from the aberration involving stimulus spending in 2010-11, the trend has been for between Rmb4-5 trillion to be added each year. A similar amount will be produced this year. (And contrary to the ‘slowing’ mantra in the media, if China grows at 6.5% in 2016, it will add slightly more to its GDP this year than last.)
It is more accurate to say that China faces a slowing GDP growth rate. That said, because the economy gets bigger with each successive year, that is not the whole story. For instance, it took 14% of growth in 2007 to generate roughly the same amount of new GDP as a growth rate of 7% would do today. That’s what Premier Li Keqiang meant when he said recently: “Every percentage point of GDP growth today is equivalent to 1.5 percentage points of growth five years ago or 2.5 percentage points of growth 10 years ago.”
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