A carefully researched study by economists at the Brookings Institute estimates that the Chinese government inflates its gross domestic product by about 12%.
The reason this is important is that even with the Chinese overestimating their national wealth, they still have a huge economy. And the current downturn in economic growth in China threatens to hurl the world into a serious recession.
Since China managed to weather the fallout from the financial crisis without registering much of a slowdown in its “official” GDP figures, playing “guess the real growth rate” has become one of the most popular parlor games among the professional economist set. Whereas the stakes are much higher for academics on the mainland (one of whom was censored and threatened by government thugs after speculating that GDP growth on the mainland might be closer to 2%), researchers at American think tanks have freely offered estimates ranging from 2% to 4% (which, admittedly, would still put China well ahead of the US).
But as investors and economists once again cast a wary eye toward China as signs of flagging growth are once again threatening to sink the whole world into a recession, […]
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