5 Comments

Glenn, thanks for insights and sharing. You might have missed one point that OECD countries also have social transfer in-kind from government to household. US's social transfer in-kind accounts for ~6% of GDP, almost the lowest among OECDs. Regarding the first chart you use in this article. "household consumption as % of GDP (2021)", the OECD data actually don't include social transfer in-kind. e.g. the household consumption of US 2021 is 68% and 74% for excluding and including social transfer in-kind respectively. It's clear that the US data is 68% in your chart. You can refer to "OECD (2023), Household spending (indicator). doi: 10.1787/b5f46047-en (Accessed on 19 September 2023)" for the details. Be noted to choose "including government transfers" if you want to include transfer in-kind. Also be noted that the data for China is not updated. China has officially included "social transfer in-kind" in NIPA accounting since 2018, and named it as "the actual final comsumption". I don't think my point will disapprove your conclusion on which I fully agree with you, but it does weaken it somehow.

Expand full comment

Glenn, you have explained GDP better than my economics professor. I am very grateful for this piece. I was always confused about how terms like "Consumption" and "Savings" correspond with day-to-day usage. No one seems to be asking, and academics seem to treat this type of question as non-issue, only to laugh at. But I believe this is precisely the most relevant question to ask. Unfortunately, I guess you won't seal the debate with your wonderful writing for how China stacks up against these definitions. Doubters gonna doubt, believers gonna believe. But I will give you 100% credit for helping readers understand basic concept like GDP.

Expand full comment

Amid the surrounding yet familiar opinions on Chinese downturning economic, your analysis provides a utterly different perspective of the hopeful optimistic future of it. Though I can’t make any judgement.

Expand full comment

The problem is how GDP has become this one word to describe how advanced a country is. Paying tens of thousands of dollars for health insurance adds to GDP. Paying for the military industrial complex to develop drones to kill and maim adds to the GDP. Paying an insufferable amount of money for rent adds to the GDP.

That useful bridge in Guizhou may as well be a dent in the country’s finances. It serves the people well and improves their lives, and that’s what matters. All the talk about GDP measurements seems like a distraction for something that is in essence a medium. Is the strategy oriented towards the wealth of human development, or towards rising profits/GDP by another percentage point?

Expand full comment

GDP is an imperfect, but best general measure of economic activity, which does correlate to quality of life and how advanced a country is.

Expand full comment