Regional Economics: Forget dog years—We are living ‘China Years’

Regional Economics: Forget dog yearsWe are living ‘China Years’

In October 2001, George W. Bush stepped out of his limousine in Shanghai’s Pudong district for the first time in 26 years and uttered a single word: “Wow."

The US President was reacting to the hyperactive growth on what had been a collection of empty fields when his father, George H.W. Bush, was US ambassador to China. In those two-and-a-half decades, several mini-Manhattans’ worth of gleaming skyscrapers had gone up.

The Chinese media breathlessly reported how impressed Bush was by Shanghai’s feats. Bush told then-president Jiang Zemin how “very impressed" he was with a city he described as “an amazing sight at night. It’s amazing in the day." Were Bush to visit China’s financial district today, he probably wouldn’t recognize it all over again. We have all heard of “dog years", or the theory that for every year a human ages, dogs age by seven. Well, welcome to the age of “China years".

That’s the subject of a new report by Stephen Green, senior economist at Standard Chartered Bank Plc. in Shanghai. His basic premise: Everyone lives through change, but not change at the speed Chinese are at the moment.

“Imagine", Green writes, “the unbelievable salaries your 20-something children suddenly have and the dizzying pace at which they shift jobs and relationships, the skyscrapers sitting on the bull-dozed tenements in which you grew up, the extraordinary travel that some of your neighbours now do, and the pain that others face as they get ill and find the local hospital wants unimaginable amounts of cash on deposit before it even looks at them. Imagine, suddenly, all those strange foreign folks on the streets, themselves also looking slightly bewildered."

Yes, welcome to the China of 2007, a place that seems to reinvent itself—at least superficially—annually. Green is perhaps the first economist to attempt to calculate China years, which he admits is only semi-serious. “Of course, our China years are only meant as a bit of fun, but we hope they help put a number to the sense of dizziness you may be experiencing after having moved to China," he says.

According to Green’s calculations, one American year is equivalent to one quarter of a Chinese year, or 2.8 months. One British year equals 3.1 Chinese months. In other words, an American or a Brit will experience as much change in China in the space of three months as he or she would at home. Life in China is roughly four times faster.

Such speed of change is more routine for Asians. One Singaporean year, for example, is about six months in China years, while one Korean year equals about eight Chinese months. A year for folks in Botswana also is equivalent to eight months in China.

While hardly a perfect measure, the concept of China years offers a lens through which to view China’s fast-changing economy. From policymakers in Beijing to investors in New York, discerning turns, problems and opportunities in a financial system moving this fast is easier said than done. The US Federal Reserve is having a hard enough time gauging how turmoil in credit markets will affect the US economy. Chinese officials lack the high-quality data available in Washington even as their economy changes under their feet.

China years work in the other direction, too. Take Malawi, which Green calculates has only grown 0.001% a year on average since 1980. Malawi is used to as much economic growth in a year as takes place in China every seven hours. Nigerians have seen things change as much in their economy over the last three decades as China has in the last 12 months.

Using data on per-capita gross domestic product (GDP) in local currency and in constant prices, Green calculated the average growth rates of about 60 countries. Next, Green compared those GDP rates with China’s and calculated how their experiences compared.

One problem with his measure is that lots of changes in economies aren’t reflected in GDP data. Also, regional differences within economies are hard to account for. Shanghai residents have probably witnessed more change in recent years than farmers in northwest China.

Even so, Green gets the point across. Cranes are working day and night to finish the latest additions to the skylines of Beijing, Dalian, Guangzhou, Shanghai, Shenzhen and other cities. Next year, Mori Building Co. will open China’s tallest building in Shanghai. An estimated 3 million sq. m (32.3 million sq. ft) of space will come onto the market by the end of 2010, doubling Shanghai’s office supply.

Many of those buildings are hypermodern monstrosities. If Harrison Ford were to star in a sequel to 1982’s Blade Runner, the film’s producers wouldn’t need to use computer-generated images to create a futuristic backdrop. They could film in any number of Chinese cities. Most of us can only imagine how it feels to experience that kind of day-in-day-out change on the ground in Shanghai. China years offer an intriguing proxy for doing just that. BLOOMBERG

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