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Victoria University's Siah Hwee Ang argues expecting the Chinese economy to grow 7% annually is like asking WalMart to grow by 7% a year

Business
Victoria University's Siah Hwee Ang argues expecting the Chinese economy to grow 7% annually is like asking WalMart to grow by 7% a year

By Gareth Vaughan

Expecting the Chinese economy to grow by 7% plus year after year is like asking WalMart to deliver 7% annual growth.

So says Siah Hwee Ang, the BNZ Chair in Business in Asia at Victoria University.

"You read in international magazines and local newspapers about this discussion about China's growth," Ang says. "Expecting a country to grow more than 7% every year is a big ask. The percentage we're asking for is relative to the country's size. It's like asking WalMart to grow by 7% a year. That's not easy."

The latest official figures had China's GDP growth at 7.3% for the July-September quarter.

One way for China to maintain strong growth is to produce more and more but this causes pollution and flow on environmental concerns, Ang says.

"No matter how you look at it over time it (Chinese growth) is going to regress. We are talking about a regression that (means) at a certain point in time extremely fast growth is going to come down in a very stable way.
And China needs the whole of China to grow as opposed to only parts, (or) bits and pieces of China to grow."

The release of Chinese economic data is often met with scepticism in the West. Although we expect China to "fabricate in a certain way,"  Ang suggests China's level of transparency comes with caveats and conditions and isn't as open as the level of transparency we expect in the West.

"In some ways I would imagine the data has been massaged. But at the same time that's the only way we can actually know the (GDP) figure."

In this video interview Ang talks more about pollution in China, noting a report suggesting about 600,000 people have been killed in China this year by smog, the APEC meeting in Beijing, climate change, plus the ASEAN Economic Community.

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*Professor Ang writes a weekly column for interest.co.nz. You can see them all here.

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3 Comments

I think you are starting to ask some good Qs....

regards

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Well said Professor Siah Hwee Ang.

The other thing unmentioned, is can you imagine what China would look like after 50 years growth of 7%.   Walmart would be a corner store.

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Using the analogy of Walmart ....  is a litlle simplistic.... silly even..??

Here is a chart of China broad Money supply growth....   ( credit growth )

http://data.worldbank.org/indicator/FM.LBL.MQMY.ZG/countries/1W-CN?disp…

The professor makes no mention of money supply...????   ( keep in mind GDP is measured in "money"....  and using a GDP deflator is, in a way, is just "playing " with the numbers )

China is close to its limits... in regards to credit growth....    I'm guessing by most metrics ...its private sector has very high debt levels..????

China still has a long way to go....  in regards to its internal economy...    Some of the infrastructure it is planning is amazing....   Railway to Germany....    Railways connecting to Thailand...     

All that kind of infrastructure .....  normally leads to economic growth

Bit like the Railroad days in America....   very Boom/bust...    but the transport connections lead to internal economic growth.

If China keeps up the money growth ...in double digits....     7% growth is possible...??? 

I dont really have a view....    just thinking out loud....

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