Professor Hu Angang on China’s Future Based on Physical Parameters

Tsinghua Professor Hu Angang, a staunch defender of China’s directed credit and SOE system, was given pages in the Council on Foreign Relations’ Foreign Affairs May/June issue to write on China’s “New Normal” — centered on slower growth. He debunks the western pundits talking about the failure and inevitable crash of China’s economy.

With all the various measures of China’s economy being used to show China’s economy to be bigger or smaller than that of the US, Hu writes: “The best method for comparing the two economies objectively is power generation, since it is physical and quantifiable. It also closely tracks modernization: without electricity, after all, or at least without a lot of it, one can’t run factories or build skyscrapers.

“In 1900, China generated 0.01% of the power the United States did. That figure rose to 1.2% in 1950 and 34% in 2000, with China surpassing the United States in 2011.” The article has a graph showing electricity generation for the two countries from 1980 to 2012, showing the lines cross in 2011.

Hu provides other meaningful statistics:

• Chinese life expectancy at 76, compared to 79 in the US;
• comparable educational standards;
• income inequality now lower in China than in the US.

Hu notes that the 2011-2015 12th Five Year Plan already called for a growth rate of about 7%, and that China had achieved five of its critical goals:

1- To create 45 million new urban jobs — 50 million were created;

2- expansion of service sector jobs from 43% to 48% — achieved;

3- lifting spending on scientific innovation from 1.75% of GDP to 2.20% – reached, resulting in 50% more patent applications in China than in the US

4- expansion of healthcare, which now covers 95% of the population

5- environmental indicators, which have improved but have far to go.