China’s GDP is Accelerating

China’s GDP is Accelerating, not Slowing


When your kid was growing up and a fond grandparent asked how much he grew since his last birthday, did you answer, “15.6 percent”?

You said, “Two inches”. Unless she remembered it from his last birthday how could she discover his current height?

Equating an economy’s acceleration rate with ‘growth’ is not useful. It’s misleading.

This year China will add $1 trillion to its $20 trillion GDP. If it accelerates at 6% for the next ten years it will reach almost $40 trillion (PPP).

Imagine that, when it reaches $40 trillion, its acceleration rate drops to 3% and adds $1.2 trillion to GDP each year. $1.2 trillion means it’s still growing faster at 3% than it was at 6%. Percentages are not proxies for ‘growth’. Can we usefully says that an economy has slowed down when it adds more at 3% than at 6%?

Is it ‘declerating’, as some writers claim? The American English Dictionary says: Deceleration. n. “reduction in speed: “speed brakes enable the aircraft to carry out rapid deceleration“. The aircraft is coming to a halt because it’s slowing down, decelerating. But China’s economy is accelerating by 6.9%. It’s getting bigger, faster, each year. Unlike the aircraft, it’s not slowing down.

Using the acceleration rate as a substitute for “growth” is misleading, even dangerous, because it hides an alarming truth: ten years from now China’s economy will be twice the size of ours. Likely bigger than the USA and EU combined. They can’t get there by slowing down.

Here’s a video about how soon China’s GDP will overtake ours:

 

What do YOU think?

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