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Home Publications Blogs Beat the Press Does Hank Paulson Really Think China's Economy Grew at an 18.7 Annual Rate from 2002 to 2012?

Does Hank Paulson Really Think China's Economy Grew at an 18.7 Annual Rate from 2002 to 2012?

Saturday, 05 October 2013 04:49

That's what he told readers in an NYT column today. Paulson wrote:

"China’s economic output expanded nearly six-fold between 2002 and 2012, from $1.5 trillion to $8.3 trillion."

It appears that Paulson took China's GDP in nominal dollars. This distorts its actual growth both because more inflation in the United States would imply more rapid growth in China by this measure and also because much of the rise was simply an increase in the value of the yuan against the dollar.

The more standard measure would be inflation adjusted growth measured in China's currency. This still comes to an extraordinary 10.7 percent annual rate, but that's hugely different from the 18.7 percent rate implied by Paulson's numbers.

This raises two disturbing questions. Is Paulson really that ignorant of both China's economy and world growth data more generally? No one who has been through an intro econ class should ever mistake real and nominal growth like this. By Paulson's measure, countries throughout the world experienced enormous growth in the 1970s because of inflation in the United States. This confusion is kind of scary for a person who both ran the country largest investment bank (Goldman Sachs) and was Treasury Secretary as the bursting of the housing bubble gave the country the worst downturn since the Great Depression.

The other question is whether the NYT suspends its fact-checking for prominent people like Henry Paulson. I have written columns for the NYT. I was asked to document every specific claim in my piece. That is appropriate and good journalistic practice for a newspaper that wants to ensure that the arguments it presents on its opinion page are based in reality. It is hard to believe that any fact-checker would have accepted Paulson's claims about the size of China's economy increasing six-fold from 2002-2012.

Comments (2)Add Comment
When Converting Communism to Fascism, Growth Rates Don't Matter
written by Last Mover, October 05, 2013 6:19
This vast array of specific reforms can’t be achieved at a stroke, and certainly not at a single party gathering. But the decisions likely to be taken in November will set China’s economy in a positive — and lasting — new direction. Advanced economies, like the United States and the European Union, depend on it as much as China does.

This comment by Paulson explains it. Having pillaged and plundered America for all it's worth, China itself is the next target of the likes of Hank Paulson and the MNCs.

You see, as a centralized command and control economy that has been growing far faster than America for years under targeted Keynesian spending, China was the ideal economic patsy to bash as communism on the one hand while buying its exports with asset bubble wealth from America bolstered by the strong dollar lie on the other hand, all the while bleeding America into a slow economic death with huge negative net trade deficits.

Now Hank Paulson turns his attention to China itself with the usual array of reforms necessary to liberate free market forces from within by breaking the bonds of communism, not unlike those lectured necessary for America that brought it down as well, as it broke the bonds of "socialism" and plunged into a deep recession.

Missing the annual growth rate of China by a full 8% is a mere quibble in context of the message delivered by the messenger here, which is to undermine and destroy every conceivable possibility of the emergence of true competitive free markets, and replace them with global neo-fascism.
written by Chris E., October 05, 2013 8:11
Poor Hanky Poo is just a sad banker with a lit degree, you can't expect him to understand basic macroeconomics, Dean.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.