The Real China

Chinese Farmhouse


If Megan McArdle were a rapper her pseudonym would be Credulous. The Chinese government takes her and other reporters on a show tour of a Chinese farm and she thinks she's seeing the real China.

The farmers we visited are, we're informed, about average for China these days. They have running water, electricity, and cable television. Each person farms about 1.5 mu, or roughly a quarter of an acre, with three seasonal crops: two of vegetables, one of rice. The fact that they can get three crops out of that little amount of land tells you why China has so many people.


The annual income per person is about 10,000 RMB, which has allowed a fairly massive upgrade of lifestyle for the villagers--most of the villagers seem to have their own homes, with new appliances. The journalists gawked at the small one-room dwelling that had once been the main house, and now served as a kitchen; the host, clearly embarrassed, hurried us into the three story house he built himself four years ago, replete with shiny tile and new furniture.

McArdle is impressed yet wonders if the government will end subsidies to farmers, unlike in the US. (She does not note that most subsidies go to large corporations, not small family farms, as her good buddies at Cato and Heritage could tell her.)

McArdle is also told that Chinese statistics "don't always agree." Other economics writers have noted that there are "lies, damned lies, and China's statistics," but that doesn't occur to our "journalist."

One of the enduring mysteries of the Chinese economy is, well, all the enduring mysteries about the Chinese economy. Which is to say, good statistics are very hard to come by. The other day, I spoke to an economist who said that after a long period when wages lagged economic growth, they were finally moving in the other direction, growing 30% a year.

For wages to be growing that much faster than the economy, something else must be growing slower, and I endeavored to find out what that something was. Were profits growing more slowly? No, they were growing faster than ever.

What about the government's share? No, also rising.

Could this be reflection of the inflation rate? Assuredly not, he said. These were real figures, not nominal.

Which leaves us with something of a mystery. As he admitted when I, convinced I was not understanding something, pressed him: "The figures," he said, "don't always agree."

[snip]

The lack of good economic statistics often makes it hard to know what's going on here. It's tempting to measure progress by the breakneck pace of construction, which you can see, rather than the pace of economic activity, for which you have no good measurement.

This would be a problem anywhere. But it's a particular problem in China, because the government directs so much economic activity here. It is not exactly central planning any more, to be sure, but nonetheless, government here seems to be much more actively and enthusiastically behind everything from new construction to how much lending activity goes on.

McArdle also writes a few posts about excesses in airline security, since she has just flown. One of the articles expresses concern for pregnant women fliers who don't yet know they are pregnant. The Baby Watch continues! If she is trying to think of names we suggest Hayek Cato if it's a girl and Milton Pinochet if it's a boy. Your own suggestions (in the comments) will be most welcome.