China manipulated the GDP figures, and that's how, in 2010, it superseded Japan, the world's second largest economy, commented the Russian media recently.
Media research company Chinascope published a report from Radio Free Asia, which cited a commentary that appeared in Russian daily Kommersant. The piece, titled "The Deception of the GDP," claimed that the GDP was doctored by 'powerful ruling class' for self interest.
The article claimed that China hinges on 'GDP worship' even as the non-productive economic activity is rampant, which artificially inflates the GDP figure.
"To a certain extent, this is very similar to the practices of the former Soviet Union and Japan in 1980. Everyone knows what happened to those two countries," Chinascope wrote, sourcing the information to Radio Free Asia, which had cited the article from Kommersant.
The Russian media believes that Beijing is using the fudged GDP as a tool to confront the West. Restating the Kommersant report, which was taken up by Radio Free Asia, Chinascope wrote that "this is not to say that there is no unproductive economic activity in the western market economies, but it is far less than such economic activities in China."
The article cited an example of a company, which constructed a stadium, thereby contributing to the GDP but failing to create wealth for the company. It, in fact, proved counterproductive by adding to the financial difficulties of the developer. "In this case, the growth of GDP negatively impacted economic power," the article deduced. So how can the GDP growth mean there is an economic growth?
An economic analyst and TV show host compared the Chinese economy with a fragile bubble that can burst at any time. "There is a very simple statistic to know: 75 percent of the Chinese people's wealth is in the property market. You don't need to explain anything else. The Chinese leaders think they are the smartest and can shrink the bubble slowly and painlessly," Chinascope quoted the analyst as saying.
Russian experts believe that having studied at American universities, Chinese economists need to understand the economy as "the calculation of real economic strength should exclude non-productive financial investment from GDP, make adjustments for income distribution, and replace the GDP value with calculations of the basic assets of the society.
Disclaimer: No Business Standard Journalist was involved in creation of this content
