The Chinese government has revised its estimate of how much the economy grew in 2007. The revision is upward and, if accurate, means that China has surpassed Germany to become the third-largest economy in the world. That may start some celebrations on the mainland, but the Beijing leadership knows better than to bask in the moment. China may be a rich country, but its citizens remain poor. More important, the global slowdown poses serious challenges to a Chinese leadership whose legitimacy rests on its ability to deliver increasing prosperity to its citizens.
On Jan. 14, China's National Bureau of Statistics revised upward its estimate of economic growth in 2007, from 11.9 percent to 13 percent, reaching 25.7 trillion yuan ($3.5 trillion). The revision — the second for 2007 — underscores the unreliability of all Chinese statistics: Methodological rigor is a relatively new phenomenon in a society where reality itself is malleable and politics, rather than economics, may be the most important determinant of results. Hitting targets is more important than getting the numbers correct.
If the new numbers are right, China is now the world's third-largest economy, besting Germany, whose GDP in 2007 was $3.32 trillion. And even if these numbers are too large, the trends are unmistakable: Chinese growth will continue to outpace that of Germany (and just about that of every other country). In fact, one economist predicts that China will overtake Japan — whose GDP was $4.3 trillion in 2007 — for the No. 2 position in three or four years. With a GDP of $13.8 trillion — and even accounting for the losses of last year and those anticipated for 2009 — the U.S. will retain the top spot for some time to come — 20 years at current trajectories, while most economists think it will hold the top position longer.