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By: China Rises « Chamber Of Ten Thousand Flowers

China Rises « Chamber Of Ten Thousand Flowers — Fri, 02 Apr 2010 22:08:35 +0000

[...] notable is an article written by Michael Pettis on his blog, China Financial Markets, entitled The difficult arithmetic of Chinese consumption, published a little later in 2009. In essence most of these articles talk about the rise in [...]

By: flotsam

flotsam — Mon, 29 Mar 2010 21:36:57 +0000

Could you tell me where the figures cited in the second paragraph are obtained [consumption in China, US. UK etc.]? I have been rooting around looking for referenced sources to back these but have had no luck so far.

By: balancing a globe « syncwpmu

balancing a globe « syncwpmu — Sun, 07 Mar 2010 06:36:54 +0000

[...] a globe By Brian Hayes Michael Pettis: How fast does consumption need to grow in China in order for a meaningful rebalancing to take [...]

By: balancing a globe « Thought Shop

balancing a globe « Thought Shop — Sat, 06 Mar 2010 19:46:53 +0000

[...] a globe By Brian Hayes Michael Pettis: How fast does consumption need to grow in China in order for a meaningful rebalancing to take [...]

By: US outlook on China’s demographic prospects « Wasatch Economics

US outlook on China’s demographic prospects « Wasatch Economics — Sun, 27 Dec 2009 08:00:09 +0000

[...] Pettis makes a solid case that domestic consumption in China has been shrinking in recent years as a share of GDP due to [...]

By: Edward Amadeo

Edward Amadeo — Tue, 22 Dec 2009 12:44:39 +0000

Dear Michael,
Could you explain the causal relation in the following sentence: “Or is it because the government responds to crises by increasing the amount of misallocated investment, the consequence of which is to reduce future consumption?”
Regards, Edward Amadeo (Gávea Investments, Rio de Janeiro, BRAZIL)

By: Nada Townie

Nada Townie — Sun, 13 Dec 2009 16:08:19 +0000

China has evidently found the key to solving the peak oil problem: build more vehicles.

“[Chinese] gasoline consumption will not increase that much if you add a couple of millions more new private passenger vehicles into the mix.”

We can obviously grow our way out of any resource shortage constraints, simply utilize Chinese statistics !

By: Houhui

Houhui — Sun, 13 Dec 2009 08:17:23 +0000

Glen,

I must have been missing these articles. “Leading” suggests that China has the ability to pull the rest of the world out of recession, aside from some commodity producers, I can’t see any logic behind this. Unless leading means “is first” i suppose

On the contrary the FT, WSJ, Economist, SCMP regularly have columns / articles explaining why China can’t lead the world out of recession, or indeed, why China’s recovery might be prolonging the pain in other parts of the world

By: greg

greg — Sun, 13 Dec 2009 07:05:24 +0000

@seatrus?

Your interpretation of the subdued gasoline sales makes more sense to me than the fanciful and creative ones that Kevin Kim and Nada Townie proposed.

The gasoline consumption has to do with both the composition and amount of vehicles out there. The big increase in the auto sales this year is mostly driven by small cars and light vehicles. When the economic prospect and activities were generally depressed earlier this year, usage of big commercial vehicles must have been down significantly.

Another example is electricity consumption. Both a decade ago after the Asian financial crisis and early this year, when China’s electricity consumption declined while economy was still growing (albeit at much slower rates), there had been wide-spread suspicions about China’s economic growth data. Of course, the calls were much louder a decade ago.

I think the similar explanation can also be applied to electricity consumption: During the economic downturn, the heavy industries or the industries that consume electricity much more heavily slowed down much more drastically, bringing down the total electricity consumption. The private consumption, meanwhile, still maintains growth.

The following are the breakdowns of the energy consumption in US and China by sectors (2005) from various sources:

Sector China US
Industry 71% 25%
Residential,Commercial and Agriculture 19% 43%
Transportation 10% 33%

The high % of transportation in the US reflects the fact that US has more cars and Americans drive much more than Chinese, not surprisingly.

By: Rien Huizer

Rien Huizer — Sun, 13 Dec 2009 05:22:39 +0000

Part of the trouble with this debate is (1) that neither the US nor China have national accounts that follow UN guidelines (which by themselves are a bad compromise and, like Windows, produce occasional improvements that users adopt only with great reluctance. (2) China is unique. Its economic structure, artificial rural/urban divide, role of the state, huge informal sector create accounting problems that compound a legacy of national accounting as a central planning tool (and we all know central planning did not work in China, for reasons that are too complex to be discussed here, but still relevant for any formal or centralizing device facing people with local power) . A central planning tool that hails from the same era as our form of GDP accounting (and used initially to assist the Roosevelt administration in macroeconomic management. Unfortunately, GDP accounting and macroeconomic management, once introduced, tend to persist and are extraordinarily resistant to change (bar revolutions of the East-European type, or conquest). But comparing measurements requires a great deal of care and background knowledge.

As far as I know, there is no (at least not in the public domain) reliable and certainly not recent “US”, “Euro” or “UN” (old or new) presentation of Chinese GDP data. As a result, all we can do is speculate, look for areas that may well be “true” , genuine omissions and genuine untruths or implausibilities. That is why an updated IMF country report would be so useful..