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 »
As you’d expect, analysts have been scrambling to make sense of it all, with reasons given ranging from dead pigs to cold weather. But one thing keeps cropping up: the luxury crackdown. Continue reading »
China’s economy has grown at 8 per cent and more each year over the last decade, but much of that has been fuelled by debt. Michael Pettis, professor of finance at Peking University and author of ‘The Great Rebalancing’ explains to emerging markets editor Stefan Wagstyl the problems facing China as it rebalances its economy from one driven by state investment.
So there it is. China’s economy is no longer slowing down. Growth in the fourth quarter rose to 7.9 per cent. Hard landing avoided. Hurrah.
For those that panicked last summer over the potential for economic apocalypse on the mainland, the fact that growth stayed above 7 per cent for the duration of 2012 might be a little puzzling. But, look at an alternative take on Chinese growth, and those concerns look more justified. Continue reading »
Friday is going to be all about China’s fourth quarter GDP figure.
With growth in the previous quarter having come in at a disappointing 7.4 per cent – the slowest pace in three years – the big question on everyone’s mind will be: has China’s protracted slowdown finally run its course? Continue reading »
If China’s days of growing at 10 per cent are over, what might be a plausible average growth rate for the near future?
Pessimists suggest 6 per cent because of the huge overhang of over-investment that is widespread across different sectors of the economy and the long list of difficult reforms ahead. Standard Chartered’s economist Stephen Green suggests the likely rate over the next five years is 7 per cent without big bang reforms in the interim. Continue reading »
China’s re-emergence as a global economic powerhouse is by now fairly well understood. The country has engaged in a process of economic catch-up similar to that which Japan and Korea achieved in earlier decades, writes Gavyn Davies on his FT.com blog.
The question for the next decade is whether this growth process will prove to be self-limiting. The experience of other Asian economies suggests that, one day, this will indeed happen. The supply of under-employed labour in rural areas will be drained, the growth of manufacturing will peak, and the ability to import superior technology from other economies will run out of rope. A slowdown in growth is therefore inevitable. The only questions are when, and by how much? Continue reading »
But premier Wen Jiabao cheered the markets when he said, shortly before the figures were published, that the Chinese economy had started to stabilise and predicted it would meet Beijing’s full-year growth target of 7.5 per cent. That helped push the Shanghai stocks up by nearly 1.5 per cent and the MSCI Asia Ex-Japan index by 0.7 per cent. Continue reading »
He’s worried about the overcapacity created in the recent huge investment wave, compounded by Beijing’s failure to maintain discipline over its free-spending regions or enforce loudly-touted consolidation plans in key industries, eg steel.
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