By the time I went to China in the spring of 2009, I think it was already the conventional wisdom in the United States that the People's Republic of China was just the world's latest bubble economy due for a popping at any moment. And as best I can tell that remained the conventional wisdom throughout 2010 and 2011, while in 2012 the new global business site Quartz launched with "China Slowdown" as one of its topic verticals.
Yesterday we got China's forth quarter GDP numbers and there's no crash. Indeed, with 7.9 percent year-on-year growth the Chinese economy is actually accelerating a little bit. Naomi Rovnick at the aforementioned Quartz greets the news by warning "China's Promising GDP Growth For The Year Masks Dangers Under the Surface".
And I think it does. It really does. There are deep underlying vulnerabilities in the Chinese political and economic model. Add to that the demographic trends and the remorseless logic of the Solow Growth Model and there are lots of reasons for China skepticism. But I also think it's much too rarely acknowledged that China has been proving the skeptics wrong for a few years now and that they've done so to the enormous benefit of human welfare. Even if Chinese growth grinds to a complete halt next year, the fact will be that the 4+ years of stimulus-fueled growth the PRC has enjoyed since the western economies went into the toilet have been an extraordinary increase in living standards. And even though there's a lot to criticize in the regime in Beijing, there's something genuinely admirable about the Chinese government's determination to not simply suffer through a years-long span of mass unemployment for the sake of avoiding the occasional embarassing white elephant project.
There is no lower-productivity sector than the one in which unemployed people sit around feeling depressed and helpless, yet we've had a big boom in that sector here in the USA and it's an industry that continues to grow in Europe. In China, not so much. Kudos.