How big is China’s economy? And how many poor people does it have?

The questions are simple, but I can assure you the answers are not easy. And a prominent economist in Washington D.C. has kicked up a firestorm this week interpreting new data.

Albert Keidel, a former U.S. Treasury Department official now with the Carnegie Endowment for International Peace, wrote a column in the Financial Times suggesting that China’s economy is 40 percent smaller than widely thought.

One can interpret a little noticed study released over the summer by the Asian Development Bank, Keidel said, to mean that China is smaller and poorer than people generally think.

Anybody who’s tasked with nailing down facts about China can relate to uncertainty about the economy. An editor once called and asked for data for a chart about China’s per capita income. I went to the World Bank website and drew from their statistics. The editor later demanded to know why the World Bank and CIA figures differed so much. It’s true. The CIA and World Bank are about $2,000 apart on their figures for per capita income, using what economists call “purchasing power parity,” or PPP, a mechanism to iron out exchange rate distortions, etc.

This may just seem to be tooting about lies, damn lies and statistics.

But it really matters because China’s economic size in the world economy and its levels of poverty can have major consequences.

Keidel says the new interpretation shows that some 300 million Chinese live below the World Bank’s dollar-a-day poverty line – three times larger than currently estimated – but a great improvement over the more than 500 million poor that existed in the 1980s.

"These calculations are not just esoteric academic tweaks. Based on the old estimates, the US Government Accountability Office reported this year that China’s economy in PPP terms would be larger than the U.S. by as early as 2012. Such reports raise alarms in security circles about China’s ability to build a defense establishment to challenge America’s. Well-informed analysts know that PPP calculations are a poor measure of a country’s potential military base, but with the corrected China PPP statistics, the whole question is moot. China is just not that big now and will not get that big any time soon."

Keidel’s essay juxtaposed curiously with the release in Washington Thursday of the latest report by the U.S.-China Economic and Security Review Commission, a congressional advisory panel known to be somewhat hawkish. The report said widespread Chinese industrial espionage is “the single greatest risk” to the security of U.S. technology.

A leading hawk on China in Congress, Rep. J. Randy Forbes, R-Va., said in a statement after the report’s release: “China’s intelligence activities have aggressively acquired U.S. advanced technology, often before it is fully developed here, by using a sophisticated network of low-profile civilians, academics and students embedded in U.S. society.  It is estimated that between 2,000 and 3,000 Chinese front companies are operating every day in the U.S. to gather secret information about our government and our companies.”

So there you have the enigma of China: By one count, it is smaller and poorer than you thought. By the other, it is more dangerous than you imagined.

Former Paramount leader Deng Xiaoping used to like to say, “seek truth from facts.” Problem is, it’s hard to know what the facts are.