In 2010, China overtook Japan and became the world’s second largest economy. However, Russian media commented that this happened because China artificially inflated its GDP figures.

Kommersant (The Businessman), Russia’s nationally distributed daily newspaper, published a long commentary on August 25, entitled “The Deception of the GDP.” The article claimed that some of the powerful ruling class have used GDP as a tool to achieve its goals. Although GDP shows the total economic activity of a country or a region for a period of time, can it really represent national strength?

For example, the article says that modern China is a vivid example of GDP worship. The amount of non-productive economic activity in China is huge, which artificially increases 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.

According to the article, Beijing is using this at least discounted GDP figure to compare with and confront Western GDP figures and the results can be imagined. 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 explained that the growth of GDP does not mean the growth of economic strength. For example, a company built a large stadium. This investment activity did contribute a huge amount to GDP, but it did not create wealth for the company. On the contrary, it reduced the company’s wealth and even contributed to its financial difficulties. In this case, the growth of GDP negatively impacted economic power.

An economic analyst and TV show host commented on the Chinese economy, saying that it is a huge bubble and it may crash at any time. He once said at a seminar, “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.”

Russian experts said that many Chinese economics experts have graduated from American universities and they should understand the economy. 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.

The problem in China is that the ruling class has its own purposes. Using data to show economic growth seems more important. Gradually, they have come to believe in the data that they themselves artificially inflated.

Source: Radio Free Asia, August 28, 2018
https://www.rfa.org/mandarin/yataibaodao/junshiwaijiao/lxy-08282018095756.html

Global Times reported the dramatic change in Australia’s Prime Minister that took place on August 24 by celebrating the fact that Malcolm Turnbull, who completely “screwed up the China-Australia relationship,” had “finally stepped down.” However, the report immediately mentioned that “the new guy just stabbed China in the back yesterday.” That refers to the new Prime Minister Scott Morrison, who is the sixth Prime Minister in eleven years. He just announced the day before, as the Treasurer of Australia, that Huawei would be banned from participating in building Australia’s 5G communications network. Huawei complained that the “disappointing” ban was totally “political” and was completely against the “spirit of free trade.” The report further mentioned that, in 2016, Morrison had also refused Chinese bidders from participating in the Ausgrid deal. However, Morrison did emphasize the importance of the China-Australia trade partnership a few years ago. The author concluded that, it seems the future of the China-Australia relationship is still full of uncertainty and that it might be a wise idea to wait until Australia holds its general election next year.

Source: Global Times, August 24, 2018
http://world.huanqiu.com/article/2018-08/12816478.html