China's high GDP growth hard to compare to U.S.
China's economy continues to speed ahead, but how does it compare to the U.S. during the Industrial Revolution?
Jeremy Hobson: China said today that its economy grew 9.2 percent last year. The Gross Domestic Product figure is a measure of all the goods and services that make up a country's economy. Now, for comparison purposes, our economy was growing at rate of less than 2 percent for most of last year.
But as Marketplace's Rob Schmitz reports from Shanghai, it's not fair to make that comparison.
Rob Schmitz: Some years, India's GDP growth runs neck-and-neck with China's. Sometimes economies like Paraguay's grow faster than China's. And according to economist Arthur Kroeber, here's why none of that matters.
Arthur Kroeber: What's significant about China is it's been growing at about 10 percent a year for 30 years in a row, which is the best growth performance that any country has ever had.
Any country, ever. Back in its economic heyday a hundred years ago, the U.S. economy was growing by around four or five percent a year.
But Kroeber says that, too, is a dangerous comparison. That's because the U.S. was one of the first countries to industrialize. A hundred years later, China finally got around to doing the same, and it inherited a lot of the know-how from the West.
Kroeber: So the later you come into the game, the more stuff you can borrow or copy from the people who came before at very, very low cost. And that means you can grow a lot faster.
But don't focus too much on growth, says Kroeber. Three decades ago, China's economy was small, but it was growing incredibly fast. Now, China's growth is starting to slow down, but its economy is the second largest in the world -- so that means every percentage point of growth is worth exponentially more.
In Shanghai, I'm Rob Schmitz, for Marketplace.