The problem with having lower GDP, while it makes some other aggregates more plausible, it moves China into a truly horrific debt-to-gdp ratios for a developing country. It get more somewhat more sustainable because the base is factually lower and the growth would be higher, but it's still incredibly bad.
The international trade aspect of GDP likely remains somewhat resistant to wholesale resizing. Exports would retain their nominal value since externally measured. Thus, China's exports as a percentage of their GDP will also increase dramatically.
It would be interesting to understand what other components of their economy have to shrink as percentage of GDP to balance out the percentage growth of Consumption and Exports. And the impact of debt to GDP will become even more frightening.
You've got a government that institutes capital controls that favor export led foreign investment. We can't really know what the ideal Chinese savings rate should be until Chinese savers are granted freedom of capital and China's currency floats.
My gut says the one real "consumption" investment they should be making is in more babies. I don't know whose going to occupy these apartments if nobody is around and I don't think western taxpayers who are buried in debt and also didn't have enough kids are going to start shipping goods back to elderly Chinese because "we owe them."
I doubt even with less children they'll ever face undercapacity. Unemployment still is a huge problem yet the nation does not compromise on industrial efficiency. Automation isn't stinky-faced by government investments.
Low wages, insane working hours, unemployment are much more a problem than underproduction. I doubt that will change.
Interesting article, but that last bit with the night lights strikes me as pure voodoo. Autocracies light up their countries differently, hence we infer a huge GDP revision to China... yeah I'm gonna press F to doubt.
If China really is under-consuming, any idea on how this is consistent up with all the theories economists have for purported Chinese under-consumption?
Between financial repression, exchange rate devaluation, threadbare social safety net/pension system and huoku, it seems like we have a lot of reasons to believe in high Chinese savings rates. Do these results update you downwards on the degree of financial repression and currency manipulation and upwards on the strength of the safety net, etc?
Would definitely be interested in whether the post-2011 estimates of inflation affect these results
The problem with having lower GDP, while it makes some other aggregates more plausible, it moves China into a truly horrific debt-to-gdp ratios for a developing country. It get more somewhat more sustainable because the base is factually lower and the growth would be higher, but it's still incredibly bad.
The international trade aspect of GDP likely remains somewhat resistant to wholesale resizing. Exports would retain their nominal value since externally measured. Thus, China's exports as a percentage of their GDP will also increase dramatically.
It would be interesting to understand what other components of their economy have to shrink as percentage of GDP to balance out the percentage growth of Consumption and Exports. And the impact of debt to GDP will become even more frightening.
You've got a government that institutes capital controls that favor export led foreign investment. We can't really know what the ideal Chinese savings rate should be until Chinese savers are granted freedom of capital and China's currency floats.
My gut says the one real "consumption" investment they should be making is in more babies. I don't know whose going to occupy these apartments if nobody is around and I don't think western taxpayers who are buried in debt and also didn't have enough kids are going to start shipping goods back to elderly Chinese because "we owe them."
I doubt even with less children they'll ever face undercapacity. Unemployment still is a huge problem yet the nation does not compromise on industrial efficiency. Automation isn't stinky-faced by government investments.
Low wages, insane working hours, unemployment are much more a problem than underproduction. I doubt that will change.
Citizens in the autocracy of which you speak say their democracy works better than ours, while citizens in ours complain of our autocratic leaders..
Interesting article, but that last bit with the night lights strikes me as pure voodoo. Autocracies light up their countries differently, hence we infer a huge GDP revision to China... yeah I'm gonna press F to doubt.
"autocraties light their countries differently" is a really weird idea but the paper tries to adress it!
Without specifying what is being maximized, the question makes no sense.
If China really is under-consuming, any idea on how this is consistent up with all the theories economists have for purported Chinese under-consumption?
Between financial repression, exchange rate devaluation, threadbare social safety net/pension system and huoku, it seems like we have a lot of reasons to believe in high Chinese savings rates. Do these results update you downwards on the degree of financial repression and currency manipulation and upwards on the strength of the safety net, etc?
Fascinating article, as always!
Super interesting! What would this mean for trade imbalances? That they’re also mismeasured (can they be?)?