TYLER COWEN

directs

our attention to the Financial Times, which yesterday

reported

In a little-noticed mid-summer announcement, the Asian Development Bank presented official survey results indicating China's economy is smaller and poorer than established estimates say. The announcement cited the first authoritative measure of China's size using purchasing power parity methods. The results tell us that when the World Bank announces its expected PPP data revisions later this year, China's economy will turn out to be 40 per cent smaller than previously stated.



This more accurate picture of China clarifies why Beijing concentrates so heavily on domestic priorities such as growth, public investment, pollution control and poverty reduction. The number of people in China living below the World Bank's dollar-a-day poverty line is 300m - three times larger than currently estimated.

on a rather gulp-inducing finding from the Asian Development Bank:

That's quite a revision. The included poverty statistic is stunning, to say the least. It should remind us how valuable Chinese growth is to the fight against global poverty; measures that restrict trade with China may be popular in America and Europe, but they would be devastating to a country where hundreds of millions of people can only dream of developed-nation incomes. These revisions should also reduce our expectations for rapid growth in Chinese domestic demand, and they should shame political leaders who refuse to act on climate change without similar steps from China.

On the other hand, this news should not meaningfully change our perception of China's place in the global economy. A 40 percent write-down in the size of the economy sounds massive, but at recent growth rates, it only represents about a five year setback. That's the magic of double-digit annual output growth. If China can maintain anything like its current growth pace, those poverty numbers should look significantly better in no time at all.