China's Most Misleading Indicator

Among investors and economists who study China, few arguments are more contentious than growth -- more specifically, how to measure it. Officially, China's economy has been growing at an annualized rate of nearly 10 percent for the past three decades. But plenty of analysts will argue that those figures are highly optimistic.

Why should this debate matter? After all, China has pulled hundreds of millions of people out of poverty in recent years, while building the kind of sparkling new infrastructure that makes the West envious. Whether GDP has grown by 10 percent a year or 9 percent shouldn't much matter -- either way, aren't things getting better?