Isobel Coleman

Democracy in Development

Coleman maps the intersections between political reform, economic growth, and U.S. policy in the developing world.

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Missing Pieces: China’s Growth, Booming Cities, and More

by Isobel Coleman
July 16, 2012

A man covers himself with a coat as he cycles past a residential complex under construction, which is reflected in a puddle, in Taiyuan, Shanxi province, China, July 10, 2012 (Courtesy Reuters). A man covers himself with a coat as he cycles past a residential complex under construction, which is reflected in a puddle, in Taiyuan, Shanxi province, China, July 10, 2012 (Courtesy Reuters).
In this installment of Missing Pieces, Charles Landow highlights news from China and Rwanda as well as reports on the world’s cities and the Olympic games. Enjoy!
  • China’s Growth: As China’s second-quarter GDP growth hit a three-year low, recent days have brought a fresh round of worry about the country’s economic performance—a “China OMG moment,” as a Financial Times blog post puts it. First came a Barron’s article by Jonathan R. Laing chronicling a pile of woes: bloated state firms cozy with government officials, lackluster consumption, low productivity, “mountain ranges” of empty apartment towers, an aging population, debt and bad loans, and unhappiness over inequality and repression. “It looks like the Great China Growth Story may be falling apart,” the article says. A Newsweek piece by Minxin Pei sings a similar tune,  saying that “the era of rapid economic growth driven by investments and exports is over for China.” For true long-term prosperity, Pei argues, the country must “reject state capitalism and return to pro-market reforms,” an uncomfortable prospect for the Communist Party. Steven Rattner counters all this in a New York Times op-ed, contending that China’s “economic picture remains rosy.”
  • Booming Cities: A report from the McKinsey Global Institute analyzes economic trends in the 600 global cities projected to achieve the greatest GDP growth through 2025. Of these, 440 are in emerging countries (with 242 in China alone). According to McKinsey, these “Emerging 440” should generate 47 percent of “expected global GDP growth between 2010 and 2025” and $10 trillion of increased consumer spending over the same period. Indeed, the Emerging 440 will be home to 60 percent of all those who enter the “consuming class”—those with disposable incomes of at least $10 per day. Of course, the report notes, rising populations and wealth will boost demand for resources and infrastructure. This requires investment that is not only massive but also smart and efficient.
  • Views of Rwanda: Two articles highlight starkly different sides of Rwanda. A New York Times piece explores the country’s health system, responsible for plummeting mortality and swiftly rising life expectancy. Quality facilities are widespread and almost everyone has insurance, enabling Rwandans to access care for minimal fees. Sustainability is a concern, as the national insurance scheme does not nearly cover its costs. But “Rwanda, at least, has used donors’ money wisely,” the piece concludes. A Foreign Policy article, meanwhile, highlights a recent UN report that “accuses Rwanda of financing, arming, training, and supplying recruits for” a mutiny by Congolese general and ICC war crimes suspect Bosco Ntaganda. The article excoriates President Obama and Secretary of State Clinton for failing to rein in Rwanda, arguing that a law they sponsored as senators requires them to do so.
  • Olympic Economics: A Goldman Sachs report examines some economic aspects of the upcoming Olympic games. Of particular interest is a model tying medal counts to countries’ wealth and other factors. Unsurprisingly, the model finds that “per capita income levels are positively and strongly associated with medal attainment.” But something about being a “developed market” appears to increase a country’s haul, even beyond the effect of income. The income effect also appears stronger at lower levels of wealth. Goldman projects that the top winners in London “will include five G7 countries (the United States, Great Britain, France, Germany, and Italy), two BRICs (China and Russia), one N11 country (South Korea), and one additional developed and emerging market (Australia and Ukraine, respectively).” Historically, the share of medals won by emerging countries is on the rise, reaching around 50 percent in recent games.

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