Failed State Index: China in Worsening Economic Decline

In looking at the Fund for Peace/Foreign Policy Failed State Index the other day, I made a list of fastest degrading countries and was surprised to see China on it:

There it is in position 6 on that list, having gone from an overall score of 72.3 in 2005 to one of 84.6 in 2009.  It is only 5 points from hitting the 90 threshold to be on "Alert" status - the highest category on the list, along with such basket cases as Zimbabwe, Somalia, and Afghanistan.  If the average trend of the last five years were to continue, it would reach this status in about 2011.

This seems odd, given the general impression of China as a burgeoning superpower, and so the question: does this say something bad about China, or something bad about the data quality of the Failed State Index?

To try to gain some insight on that question, I took a look at the internals of the index for China - in what way exactly is the index claiming that China is going to hell?

To remind you, here is the list of measures, along with a shorter phrase I can use in a graph legend:

• I-1. Mounting Demographic Pressures (Demographic Pressure)
  
• I-2. Massive Movement of Refugees or Internally Displaced Persons creating Complex Humanitarian Emergencies (Displaced People)
  
• I-3. Legacy of Vengeance-Seeking Group Grievance or Group Paranoia (Vengeance Seeking)
  
• I-4. Chronic and Sustained Human Flight (Human Flight)
  
• I-5. Uneven Economic Development along Group Lines (Uneven Development)
  
• I-6. Sharp and/or Severe Economic Decline (Economic Decline)
  
• I-7. Criminalization and/or Delegitimization of the State (Criminal State)
  
• I-8. Progressive Deterioration of Public Services (Deteriorating Services)
  
• I-9. Suspension or Arbitrary Application of the Rule of Law and Widespread Violation of Human Rights (Human Rights)
  
• I-10. Security Apparatus Operates as a "State Within a State" (State within State)
  
• I-11. Rise of Factionalized Elites (Factionalized Elites)
  
• I-12. Intervention of Other States or External Political Actors (External Intervention)

Here is my graph of how these indexes have been evolving over time for China:

So the largest component of the worsening score is that "Sharp and/or Severe Economic Decline" has gone from 0.5 to around 4.5.  Now, whatever else you can accuse China of, with a GDP growth of 8%-12% a year, large trade surplus, and huge foreign reserves, it's hard to see how you can accuse it of any appreciable degree of "Sharp and/or Severe Economic Decline".  If China was in economic decline during the late 2000s, then black is white and pigs can fly.  If there's any country in the world that should get a zero here, it's China.  A 0.5/10, ok, I can grant.  But 4/10 or 4.5/10?

For example Spain in 2009, in the midst of major post-bubble recession, has a score on economic decline of 1.3.  In what sense was China in significantly greater economic decline than Spain in 2009?

Wanting to make sure the error was not mine, I went back to the original websites to check the numbers again.  Here's the 2005 version (see the 0.5 in the sixth slot over)

and here's the 2009 version: (now 4.5 in the same slot)

There will be no more blogging about the Failed State Index until further notice.  This is nonsense, and so clearly the index cannot be relied on to draw any kind of conclusions about the world until there are major improvements in the methodology to avoid obvious gross errors.  Economic decline is one of the few things on the Failed State Index measures for which there are reasonable quantitative indicators: the IMF produces GDP estimates for just about all the countries in the world, so it's easy for others to figure out if a given country's economy is contracting or growing.  If the Fund for Peace can't get "Economic Decline" in the largest population country in the world right, then they certainly don't deserve a big spread in Foreign Policy magazine every year.