The Economist magazine a couple weeks ago presented a report that showed China with four-to-one gains in productivity over the United States and Japan from 1990 to 2008, using a measure called Total Factor Productivity (TFP). TFP has also been higher in China compared to the historic zenith of Japan’s and South Korea’s modernization drives, according to the article. TFP is what’s left over of output growth after you’ve taken into account growth from capital investment and the amount of work labor provides. It’s supposed to be a more accurate measure of productivity than just counting the number of hours of work done per head – especially in a country as populous as China.

Of course, China started from a much lower base of development than the developed countries, and has relied heavily on the near-manic bootstrapping of its private sector. It’s openness to Foreign Direct Investment (FDI) has also been a boon, as it has been able to co-op many of the technologies it would have been pained to develop on its own. The article supports the classic view that China is still too heavily investing in capital intensive – ie, infrastructure – projects, and that it needs to facilitate the migration of the population from a rural to an urban setting in order to keep its TFP at astronomic levels.

A point of contention I do have with the TFP comparison with other Asian Tigers at the same time in their own development curves is whether China would still be the TFP leader if the other countries had had the same “flattening” technologies and applications at hand as China does now: mobile phones, internet, personal computers, VoIP and the like. “Flattening” technologies reduce the cost to entry to new markets, product development, supply chain development and customer relationship management. Or, conversely, if China were measured in terms of its application of the same technologies of the 1960s and 1980s, whether China would still be faring as well as the current survey seems to show.

In other words, China’s great showing in the TFP race can be put down to its having started from such a low base of industrialization and from the “flattening” effects of the technologies it has embraced to leap frog from the 1930s into the 2000s. Not because it has some special mojo the others did not during their ascents to modernization.

However, the country’s elite seem to be weighing down productivity gains with narcissistic protectionist measures. 2009 marks a clear move back toward state-ism, with SOEs having bought up a fair number of companies once privately owned. Also, the central government has restricted competition in certain high-value sectors such as financial and alternative energies – something about which the European Union Chamber of Commerce has been quite vocal. And then there is the clear walling off of the Chinese net-citizenry from the international-internet to incubate its own internet companies and to control information content.

It seems the leadership has little interest propping up a Western acronym very few have even heard of that measures something very few care about – at least, in China.