China and the Case for Stimulus

A blog about business and economics.
Sept. 4 2012 8:15 AM

China and the Case for Stimulus

I would say that China over the past several years is a great real-world example of fiscal stimulus at work. So does Tyler Cowen, except he seems to see the Chinese experience as a debunking of stimulus.

But look at the numbers. In 2007, China's PPP-adjusted GDP per capita was $5,562. In 2008 it was $6,201. In 2009 it was $6,810. In 2010 it was $7,571. In 2011 it was $8,407. The 2012 growth numbers look certain to show a drastic slowing down of growth. But let's get really pessimistic about China and assume 0 percent growth across 2012 followed by a 5 percent contraction in real GDP per capita in 2013. That would still leave China's per capita GDP level about 50 percent higher than it was when the world starting going into recession. That seems to me like an enormous success story.


The big knock on the Chinese economy is that there's all this malinvestment and tons of white elephant projects. And perhaps there are. But there's no sector of the economy with lower productivity than the unemployment sector, and no public investment more wasteful than having a human being spend years scanning help-wanted ads and feeling depressed. Does someone seriously want to argue that none of these projects have any value? It doesn't seem to me that anyone in China is debating whether or not the typical household is better off than it was four years ago. Here in the USA we've had about 2 to 3 percent of our workforce persistently engaged in doing nothing for the past several years, and the forecasts all show that trend continuing for a while. That, to me, looks like intolerable waste.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.



Talking White

Black people’s disdain for “proper English” and academic achievement is a myth.

Hong Kong’s Protesters Are Ridiculously Polite. That’s What Scares Beijing So Much.

The One Fact About Ebola That Should Calm You: It Spreads Slowly

Operation Backbone

How White Boy Rick, a legendary Detroit cocaine dealer, helped the FBI uncover brazen police corruption.

A Jaw-Dropping Political Ad Aimed at Young Women, Apparently

The XX Factor
Oct. 1 2014 4:05 PM Today in GOP Outreach to Women: You Broads Like Wedding Dresses, Right?

How Even an Old Hipster Can Age Gracefully

On their new albums, Leonard Cohen, Robert Plant, and Loudon Wainwright III show three ways.

How Tattoo Parlors Became the Barber Shops of Hipster Neighborhoods

This Gargantuan Wind Farm in Wyoming Would Be the Hoover Dam of the 21st Century

Oct. 1 2014 8:34 AM This Gargantuan Wind Farm in Wyoming Would Be the Hoover Dam of the 21st Century To undertake a massively ambitious energy project, you don’t need the government anymore.
  News & Politics
Oct. 1 2014 7:26 PM Talking White Black people’s disdain for “proper English” and academic achievement is a myth.
Buy a Small Business
Oct. 1 2014 11:48 PM Inking the Deal Why tattoo parlors are a great small-business bet.
Oct. 1 2014 6:02 PM Facebook Relaxes Its “Real Name” Policy; Drag Queens Celebrate
  Double X
The XX Factor
Oct. 1 2014 5:11 PM Celebrity Feminist Identification Has Reached Peak Meaninglessness
  Slate Plus
Behind the Scenes
Oct. 1 2014 3:24 PM Revelry (and Business) at Mohonk Photos and highlights from Slate’s annual retreat.
Brow Beat
Oct. 1 2014 9:39 PM Tom Cruise Dies Over and Over Again in This Edge of Tomorrow Supercut
Future Tense
Oct. 1 2014 6:59 PM EU’s Next Digital Commissioner Thinks Keeping Nude Celeb Photos in the Cloud Is “Stupid”
  Health & Science
Oct. 1 2014 4:03 PM Does the Earth Really Have a “Hum”? Yes, but probably not the one you’re thinking.
Sports Nut
Oct. 1 2014 5:19 PM Bunt-a-Palooza! How bad was the Kansas City Royals’ bunt-all-the-time strategy in the American League wild-card game?