When China’s premier was an up-and-comer in the provinces, he famously told US diplomats that he looked at indicators including electricity consumption and freight transport to gauge the true state of the world’s second largest economy. According to a Wikileaks cable, Li Keqiang said such figures were more reliable than the government’s own official GDP growth number.
Embarrassingly for the then premier, Wen Jiabao, the “Keqiang index” was thus christened and was subsequently used by economists to cross-check the GDP growth numbers revealed every March at the annual session of China’s parliament, the National People’s Congress. Continue reading »
So rarely does China’s official GDP growth target bear more than a passing resemblance to subsequent reality (see chart), that it might be regarded as a less than useful indicator.
This year, however, much is riding on which number – if any –Beijing announces as its GDP target for 2014 at the annual National People’s Congress (NPC), which convenes on Wednesday. There are several potential permutations, each of which may indicate very different policy intentions. Continue reading »
Just when world markets need them least, new signs of underlying economic weakness are emerging from China.
Data from China Confidential, an FT research service on China, show that the real estate market – one of the key 2013 engines of Chinese growth – is starting to sputter. Continue reading »
So, China’s gross domestic product grew by 7.7 per cent in 2013. Much media comment has focused on how this performance, by Chinese standards, is relatively lacklustre. It is, together with last year’s 7.7 per cent expansion, the lowest growth rate since 1999.
However, there is another perspective. A quick look at the International Monetary Fund’s list of countries’ GDP numbers shows that China grew last year by an amount somewhat smaller than the size of the entire Indonesian economy but larger than Turkey. Continue reading »
The 6th in our series of guest posts on the outlook for 2014 is by Michael Pettis
November’s Third Plenum proposed significant economic reforms to rebalance China’s economy and reduce its addiction to debt, in large part by reversing many of the processes that drove growth in the past three decades. Of course this potentially radical shift in China’s development model will make predicting economic performance in 2014 more difficult than ever.
And we have already seen how difficult reform is likely to be. The past four years were characterised by a stop-and-go process of decelerating growth, in which periodic attempts by the regulators to constrain credit caused the economy to slow sharply but, as policy makers backed off each time, both GDP and credit growth subsequently reignited, although at gradually declining paces. We will see this even more sharply in 2014, with a continued unstable balance between attempts to constrain credit growth and attempts to keep the economy from slowing too quickly. Continue reading »
By Ken Peng of Citi Private Bank
China must rebalance! Yes, everyone from President Barack Obama to your average Beijing taxi driver knows that. Around 48 per cent of China’s GDP is investment, just 36 per cent is household consumption, with government spending a bloated 13 per cent and net exports, 2 per cent. Whether through timely and painful reforms now or delayed reforms and disaster later, investment growth is expected to falter and consumption to be unable to pick up the slack.
But what if these basic assumptions are wrong? Continue reading »
He's behind you
FT readers will know that Latin America’s GDP growth is tied to the Chinese economy. If Chinese output dips, this usually reduces growth estimates for Chile and Brazil, owing to their high trade volumes. Lower Chinese demand for copper, soya and iron ore – among other goods – hits both economies.
Commentators see Mexico as a separate case. Mexico exports large amounts of manufactured goods to the US, just like China. Its economy is often thought to be little impacted by revisions in Chinese GDP figures.
Or is it?
Continue reading »
By Leslie Young of the Cheung Kong Graduate School of Business
On Friday, China will release its third quarter GDP figures to wide scrutiny, given the country’s impact on the world economy. But what might be overlooked by the focus on GDP growth?
Additional insights can be found in the data for the growth of Gross National Income (GNI), which augments GDP by producer taxes and the net income paid to nationals. Continue reading »
After all the furore this month after Lou Jiwei, China’s finance minister, suggested the country’s growth target was 7 per cent – and not the official 7.5 per cent – Premier Li Keqiang has weighed in.
Li was reported by Xinhua news agency as saying growth would only be tolerated above… 7 per cent. Given that China’s growth targets in recent years have been more of a bar to surpass than a bullseye to hit, this sounds suspiciously similar to Lou. Never mind – stocks rallied at the news. Continue reading »
China’s economy is rebalancing away from investment and exports towards consumption. But with high debt levels and the need for reform, it is likely to lead to a continuing slowdown in growth and some short term pain. Citi’s Senior China economist, Shuang Ding talks to the FT’s Josh Noble.
OK, so it wasn’t 7 per cent – let’s leave finance minister Lou Jiwei’s comments aside for now. But it was 7.5 per cent, and although that sounds like a healthy number in the west and was expected by economists, it’s part of a downward trend.
So is there anything positive to take from the GDP numbers? Continue reading »
Where's the .5?
Has China just cut its 2013 growth target?
That is the question being asked today after Lou Jiwei, the finance minister, said in unscripted comments that China was aiming for a 7 per cent GDP expansion this year, down from the 7.5 per cent goal set during the national parliament in March. Continue reading »
A third dollar bull market could be charging our way. George Magnus, an economic consultant, discusses with Long View columnist John Authers the impact the scaling back of US monetary easing could have on emerging markets, particularly China.
In China, it’s often the case that the numbers themselves are a source of confusion, if not outright disbelief. But sometimes the numbers also speak for themselves. And one in particular is telling: credit intensity.
This measures the amount of credit needed to generate growth, and it has risen rapidly in the past six months to near its highest level. In other words, when it comes to GDP, China is getting less bang from it’s credit buck. Continue reading »
It’s a growth rate that most other countries can barely dream of, but for China, this quarter’s GDP growth is a disappointment.
This chart shows why (after the break): Continue reading »