Who wants to be bigger than the U.S.? Not China!
A man and a woman ride a motorized tricycle at an intersection in Beijing. Chinese manufacturing activity improved slightly in April as domestic demand showed 'mild improvement', but it warned the world's second-largest economy was still showing signs of weakness.
A new World Bank report suggests China's economy could surpass America's this year (by one measure, at least). But far from taking a triumphant tone, China's government is rejecting the numbers. Chinese leaders are wary about how their country's rise to the top could increase pressure on them to make concessions on carbon emissions, trade policy, currency and international aid.
There's another reason for China's muted response to this news: trumpeting strong growth numbers likely wouldn't be well received by the hundreds of millions of Chinese still living in poverty.
"The Chinese government usually reacts in a very quiet way," says Yale University finance professor Zhiwu Chen. "They realize that China overall, it's still a developing and a poor country."
All this is not to say that Chinese officials aren't privately excited about economic growth. Just don't look for any champagne, or Moutai toasts on camera.
Mark Garrison: China tends to downplays news like this because of global politics, says Peterson Institute senior fellow Nicholas Lardy.
Nicholas Lardy: It certainly puts pressure on them to do more in the international arena.
When the numbers say you’re a bigger deal, other countries push you harder to give aid, change trade policy and stop screwing around with your currency. Dartmouth business school associate dean Matt Slaughter explains that rising in the ranks also brings attention to Chinese industrial pollution.
Matt Slaughter: The faster is China’s growth, the more the world legitimately looks to China for any meaningful carbon reduction.
China also worries about how economic news plays domestically, where hundreds of millions still live in poverty. Yale finance professor Zhiwu Chen says trumpeting growth numbers wouldn’t go over well at home.
Zhiwu Chen: The Chinese government usually reacts in a very quiet way, because they realize that China overall, it’s still a developing and poor country.
Remember, Lardy adds, China tops another important chart.
Lardy: All of the measures are in a sense a little bit artificial, because they’re a function to a considerable extent of the fact that China has 1.3 billion people.
Spread over its giant population, the swelling GDP isn’t much per person. Now all this doesn’t mean Chinese officials aren’t excited about economic growth, says Milken Institute managing director Perry Wong.
Perry Wong: To be ranked #1, they may celebrate in private.
But any champagne, or Moutai toasts won’t be done on camera. I'm Mark Garrison, for Marketplace.