According to Gordon Chang at Forbes China's real economic growth isn't near the official 7.8% stated by the Chinese government, he thinks it is around 3.8% based off of other statistics. Now the US would kill for 3.8% economic growth and it is nothing to sneeze at, even for a developing economy. The United States averaged 3.7% growth over the course of its history, but an analysis of the rolling 10 year historic average of the United States should illustrate what is wrong with many developing economies today.
Even when America was developing average growth rates rarely exceeded 5% and hovered between 3% to 4% though there were years were growth was particularly high. Compare this to recent Chinese economic growth has averaged, at least officially, around 10%. And this is what strikes me, though a case could be made about higher growth rates for newly developing countries due to technological advances, I still have a hard time believing that developing countries today could develop, sustainably, at a rate higher than 19th century America.
19th century America had everything going when it comes to being able to sustain high levels of economic growth. The nation was expanding it's borders rapidly, had material wealth in great excess of it's needs, a rapidly growing population, little foreign involvement, technologies, such as railroads, telegraphs, telephones, electricity, and industrial advancements, that were increasing national productivity at mind boggling rates. And even then American economic growth rates were never consistently 10% per year.
Contrast this with many developing nations today. While there are amazing technological developments that would contribute to a higher nominal economic growth rate today the conditions for China today are no where near as favorable as it was for 19th century America. China has to import materials and goods that it doesn't have, something 19th century Americas did not have to do. It has an extremely large impoverished population, something 19th century America never had. It has a population whose workforce size has already reached peak, once again this was not the case in 19th America.
And somehow this nation of over a billion people have been able to have consistent economic growth without a single decrease in national GDP since 1987? That is over 20 years of consistent economic growth with out a single recession. Even 19th century America saw periodic economic contractions during it's developing period. Keynesians will of course state that the contractions in 19th century America were the result of a lack of oversight to smooth out the economy and that the reason why China has been able to grow continuously is precisely because of that oversight. Never mind that all Keynesian economic policy does is kick successive necessary business corrections down the road until there are too many cans to kick and a massive economic correction occurs.
Or another way to illustrate this issue. China has grown from a 1.19 trillion dollar economy at the turn of the millennium to an economy of over 7.3 trillion dollars 11 years later which means they have increased their economy by 7 fold. Even Warren Buffet, arguably the greatest investor living to date, would only have increased your wealth by 6 fold assuming a 20% yearly return rate. I am somehow supposed to expect that an entire economy is able to perform as well as Berkshire Hathaway, a company that only fills it's portfolio with the most profit?
I could be very wrong, but I just don't see how a nation, even a developing one with potential can somehow economically out grow the 19th century United States and have it not be an indicator of how flawed the metrics we are recieving out from China.