China's economy grew 3 times faster than the US
- By John Ross
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E-mail China.org.cn, February 2, 2015
In reality, China has the world's largest investment resources. As Lin noted, "China's investment resources are abundant… private savings in China amount to nearly 50 percent of GDP… Even under comparatively unfavorable external conditions, China can rely on investment to create jobs in the short term; as the number of jobs grows, so will consumption." In a developing economy, investment accounts for 50 percent of economic growth on average, and in an advanced economy it accounts for 57 percent. It is therefore no surprise that China's much greater investment resources are leading its economy to continue to grow much faster than the U.S.
But why is China able to successfully carry out such investment programs, whereas in the U.S. numerous calls for increased investment in areas like infrastructure have not been implemented, even when publicly supported by such leading figures as former U.S. Treasury Secretary Larry Summers?
The reason lies in the fact that China is a "socialist market economy" not a "capitalist market economy." China possesses a state sector which does not aim to encompass the whole economy nor to administer it, but which is strong enough to set (and maintain, if required) China's overall investment level. As the Wall Street Journal accurately summarized, "Most economies can pull two levers to bolster growth: fiscal and monetary. China has a third option. The National Development and Reform Commission can accelerate the flow of investment projects."
No capitalist market economy, including the U.S., possesses such a powerful structure as China's "socialist market economy." This is why China's economy has continued to persistently outperform the U.S. and why all media predictions of disaster over several decades, and again in 2014, have invariably turned out to be false.
Another statistic casts further light on the situation. While sections of the media were running inaccurate stories on China's economy, foreign companies increased their investment in China from $123.9 billion in 2013 to $127.6 billion in 2014. As usual, companies - which have to deal with money and not propaganda - were more in step with economic reality than sections of the press.
For many years, I have made my living by supplying companies more accurate analysis of economies such as China than could be found in the Financial Times, the Wall Street Journal, and The Economist. Such publications have not been able to comprehend the superiority of China's economic structure to that of the West, and have therefore made repeated erroneous predictions. It seems that there are still openings in that field and, in light of the continuing errors in such publications, the factual record for 2014 again clearly shows that those seeking more accurate predictions of what will happen in China's economy will find these in China's media, from China's top economists, and in China's own growth projections.
The writer is a columnist with China.org.cn. For more information please visit: http://www.china.org.cn/opinion/johnross.htm
Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.
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