China’s Economy is 60% Smaller Than We Thought

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0:00 – introduction
1:22 – official figures
3:31 – evidence
5:13 – sponsor
6:31 – true GDP
8:15 – Pro’s & Con’s

Made Possible by Research Assistance from Carlo Humpert
In Memory of Macrocat (Henry)
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Narrated and produced by Dr. Joeri Schasfoort (University of Groningen)
Studio designed by Alex Moore Via

Written by Money & Macro


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  1. Another possible factor is the way people transport. In other countries like the US, people might rely more on cars which produces a lot of light. But in authoritarian regimes, the government might emphasize more on public transport which would produce much less light per person than if everyone uses cars making the light growth slower.

  2. Why not just use actual satellite pictures of China's evening rather using average of all supposedly "authoritarian" countries? If you are able to get the evening satellite pictures of all the other "authoritarian" countries evening lights, surely you can get it on China! It's such a large land mass.

  3. Does China fake its numbers? Absolutely. Is it's economy 60% smaller than reported? Absolutely not. A simple sense check is sufficient here.

    China's 2021 exports = $3.5 trillion. This number should be accurate since exports are a 2-party transaction, not possible for China to fake. China's reported 2021 GDP = $17.7 trillion. Exports = 20.3% of reported GDP (3.5 / 17.7). If you are correct and reported GDP = $17.7 trillion x 40%, then China's actual GDP = $7.1 trillion. In this case, exports = 49% of GDP. Does that seem realistic? It seems highly improbable to me. Exports are 13% of US GDP for reference.

    I've lived in China for 12 years and work as a consultant for international firms. I know that they have been moving to "China for China" for about 5 years. Why? Because domestic demand is outpacing demand in their export markets. It is extremely unlikely that domestic consumption + business investment + government spending is only 51% of China's economy.

  4. Although I’m convinced the Chinese government is the most artful lier when it comes to anything they report, it might well be that since China is a more authoritarian , and at least officially, “puritanical “ country, their wild nightlife remains more hidden. This might account for some of the missing nightlight, although, of course, not all…

  5. One big flaw in your premises about light growth is that the urbanization policy of China meaning concentrating much bigger population in dense areas blew a big hole in your hypothesis. In a way, you're comparing apples and oranges when saying that the growth of light in China should mirror the growth of light in USA or other countries. Have you even heard of mega cities in China compared to USA ? The growth in mega cities tends to go up in height . something I doubt a satellite picture can pick up easily. Tell us about the number of cities that exceed 10 million , 20 million and 30 million in China and try to compare with the number of cities in USA that exceed 10 million and you get the idea.

  6. Another issue you failed to stress is that China's manipulated numbers come from the competitive nature of regional governors trying to reach targets assigned to them by the central government instead of some kind of sinister plot by a Machiavellic 'authoritarian' body out there to fool the world.

  7. The only thing you can trust from China is that the CCP lies, and they lie about everything even when they do not have a need to lie. I do not doubt for a second that their GDP claims are false and probably wildly false.

  8. When China makes a pen nobody trusts them to make the ballpoint, or the ink, so they only add about 5 percent to the value of the product. When they make steel [ $675 a ton] they import iron ore from Australia for $200 a ton metallurgical coal from Pakistan that really came from Australia at $375 a ton plus whatever Pakistan added to the price, so steel is produced at only the cost of the raw materials, and made at a loss to try and destroy other countries steel industries. State owned enterprises borrow money constantly [ eg steel industry], so the real economy is lower than they claim, because it makes very little money.

  9. This is the first time at this channel, and while I consider the correlation between nightlight patterns and GDP growth a stretch and credibility, I think it is an interesting postulate worth further investigation.

  10. It's like the analysis of China's demographic data where it appears they overcounted their population but 10s of millions of people, possibly as high as a 100 million person over-count. They have a strong "face" culture and if things don't appear good then it has massive implications.

  11. If you built one million apartments and leave them empty and without electricity, is that GDP?

    If you built hundreds of thousands of electric vehicles with the sole purpose of letting them abandon on a remote area, Is that GDP?

    Wasteful investment may be a huge portion of the GDP that doesn't show at night. That is why I hate GDP numbers. Tell me how much money every family have in their savings account. Tell me how much every family spends on vacation. Tell me how much you are spending on education and health. Those are better indicators of sustainable growth.

  12. Is there any country in this world that has more national debts than the US? Why is it still considered the world's number-one economy when it buys most of its consumables from China? China's trade with the rest of the world is felt by every country on this earth not forgetting the huge number of countries that consider it as their number one trading partner. Ask Germany, the largest economy in Europe, which country is its number one trading partner, the US or China?. The rate of desperation by the west to soil China's image will lead nowhere. Better get back to basics.

  13. During the 'Cold War' the DDR (East Germany) was ranked as the 17th largest economy based on its GDP figures.
    Just travelling through that country, as a youngster, in the spring of 1979, convinced me that those
    statistics couldn't be correct, and that very shabby looking Eastern Germany was in fact a bankrupt
    This assumption that turned out to be totally correct only 10 years later.
    During my many short trips to China in the past, my conviction grew ever stronger that China's economic growth has a considerable facade element built in to it.

  14. Isn't it much better and easier to just check the difference between GDP growth and import/export growth? Import/export numbers can obviously not be manipulated as much and there should be a strong correlation between GDP growth and trade growth.

    Looking at World bank numbers between the years 1996 and 2019:
    US imports increased 3.2x………….. China imports increased 18x
    US exports increased 2.9x………….. China exports increased 17x
    US GDP increased 2.6x………….. China GDP increased 16.5x

    Looks about right.. So unless China has managed to somehow fake import/export numbers I think the official GDP numbers aren't that far off.

  15. I have been thinking about this work and would find it very interesting if you could do a similar analysis on Russia. It might give insight into how international sanctions might, or might not, be working. Thank you.

  16. China has an energy crisis that's been going on for years, that's why the government is pushing for the building of coal plants despite green energy concerns — to be frank, Beijing has a quota for renewable energy production, but they aren't meeting it; meanwhile, coal is abundant in China, but is under stricter control, thus leading to heavy electric use restrictions during the summer and winters. "Second line" and "Third line" cities had to contribution much of their power grid output to the upper level cities since energy use on those commercial centers are unsustainable.
    There's also why a part of the new agenda being pushed this year within China was to support and construct new coal power plants since there would be no other way to support a post-COVID economical revival.

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