From: "Rosser Jr, John Barkley" <rosserjb-AT-jmu.edu>
Subject: M-I: Re: Mounting Problems with Barkley Rosser
Date: Wed, 6 Nov 1996 11:50:27 -0500 ()


     Louis G., sorry if I have disrupted your sleep.  I 
don't know your habits in this regard.  Personally, I am 
not getting much myself these days, due to being very 
busy, and thus have been much less evident on this or other 
lists lately (no, Uncle Lou, it is not because I have been 
put into my place by your denunciations, much as you might 
wish that that were the case, :-)).   Anyway, a couple of 
points:
     I noted some time ago that there are wide variations 
in the estimation of Chinese GDP.  Actually, from the 
international agency standpoint, it helps the PRC to claim 
to be poorer.  It makes a better case for it to receive 
special LDC treatment in financing and trade deals.  In 
fact, the US has been opposing such treatment of the PRC, 
arguing that it is now a "developed" nation and no longer 
needs any special assistance. Indeed, I am a bit mystified 
here, but think that this reestimate is probably not due to 
malign US influence, given that it weakens such US 
arguments. I note that the person pushing the very highest 
estimates of Chinese GDP has been none other than Larry 
Summers, US Deputy Treasury Secretary and former Chief 
Economist at the World Bank.  Maybe this reestimate at the 
WB reflects his absence from that post.
     As regards SOE losses, my source was a recent 
Washington Post article.  Your sources may be better on 
that and you may be right on that.
     The story about local governments collaborating with 
foreign corporations came from northern China and involved 
in particular Korean firms.  Their record in their country 
with regard to labor-management relations is notoriously 
bad and that they would pull such stuff in PRC is 
unsurprising. The reports on southern Chinese SEZs involved 
in particular a Taiwanese shoe factory that produces 
sneakers for Reebok, and a bunch of other well known 
western brands.  There was no indication of local 
government involvement there.  There is clearly a big 
difference between SEZs where local government involvement 
is much less and activities in other kinds of zones where 
local governments play a larger role.
Barkley Rosser
On Tue, 5 Nov 1996 18:57:05 -0500 (EST) Louis R Godena 
<louisgodena-AT-ids.net> wrote:


> 
> Mr Barkley Rosser,  indelicately suggests:
> 
> >     Contradictions within the rapidly changing Chinese 
> >economy continue to mount:
> >     1)  A recent study by the World Bank has sharply 
> >lowered the PPP estimate of PRC real income.  One 
> >implication is that poverty rates, especially in inner 
> >rural areas, are much higher than many thought.
> 
> Barkley is probably referring here to an *Economist* piece (October 12th -
> 18th) that noted two important changes in the way the World Bank measures
> Chinese poverty.     First,  it raised the income level below which a
> Chinese is deemed to be poor from $0.60 to $1.00 per day.    This has had
> the effect of increasing the number of Chinese deemed to be poor from fewer
> than 100 million to well over 300 million.     Second,  the report has
> lowered estimates for Chinese income per person,  measured on a purchasing
> power parity (PPP) basis,   which adjusts for the local cost of living.
> The Bank's 1996 *World Development Report* puts Chinese GDP per person,
> measured on a PPP basis,  at around $2500 in 1994.    The new report puts
> the figure at $1,800.
> 
> So what?  asks a number of Asian economists writing in the *South China
> Morning Post* (October 14th).     What really counts is Chinese wealth at
> the real exchange rate,  not at PPP.    They point out that it is misleading
> in the extreme to extrapolate PPP-based estimates of GDP because the
> undeniable pace of Chinese growth (especially its burgeoning exports) is
> bound to result in an appreciation of Chinese currency,  which will narrow
> (if not erase altogether) the gap between a PPP-based GDP and one figured on
> a nominal basis.     And an editorial in Hong Kong's leading daily (*Morning
> News*,  October 12th) frankly accused the World Bank of playing politics
> when it failed to account for the sudden change in the way it figures the
> Chinese PPP (the WB cited,  simply,  "better data").    Both *Vietnam
> Investment Review* and *Business News China* noted the impending change of
> commands at both the IMF and the World Bank and indelicately wondered if
> perhaps Washington may have some role in the abrupt change in status.    A
> discomfited Chinese economy is always good news for America's balance of
> payments.     
> 
> And,  Barkley just wouldn't be Barkley without mentioning those darn SOEs:
> 
> > 2)  Recent reports indicate that losses by SOEs 
> >continue to mount.  This continues to put inflationary 
> >budgetary pressure on as these enterprises are propped up 
> >in a soft budget constraint manner.
> 
> "Losses" on the part of State Owned Enterprises are actually at their lowest
> rate of decline since 1988,   according to figures released last week by the
> Bank of Hong Kong (*South China Morning Post* October 30th) and confirmed by
> the World Bank itself.    And Chinese inflation is at its lowest level since
> 1992,  if the World Trade Organization is to be believed (of course,  much
> of their data is drawn from the Chinese governemnt itself,  especially the
> Chinese Securities and Regulatory Commission).          
> 
> Barkley's anthem about increased worker exploitation in the Special Economic
> Zones is based on fact,  though his assertion that "local governments" are
> collaborating with foreign firms (he cites Taiwanese and South Korean firms
> as especially culpable) in exploiting workers does not jibe with the reports
> I've seen from the International Labor Organization and independent
> observers from Sweden and Belgium who have reported on Chinese labor
> practices in southern China within the past year.    Cases of workers being
> "imprisoned" and "tortured" calls for the citing of some evidence,
> especially when it is asserted that such conduct had at least tacit approval
> from the authorities.    Similar charges made last year in Vietnam turned
> out to be true (*Business News IndoChina* December 1995),  leading to an
> impromptu strike at a sneaker factory outside of Ho Chi Minh City (a Korean
> foreman had beaten a women employee with a shoe).    In this case,  however,
> the offending supervisor was expelled from the country and his employer hit
> with a hefty fine.    We can expect more of this,  no doubt,  as the local
> Communist Party organizations in both countries act as de facto "labor
> brokers",   often superceding the actions of trade union officials themselves.
> 
> I would like Barkley to go into some depth on this,  and,  while he is at
> it,  generally  refrain from writing this kind of post on days when I have
> worked the night before.
> 
> Louis Godena   
> 
> 
> 
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-- 
Rosser Jr, John Barkley
rosserjb-AT-jmu.edu




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