Chinese GDP A Case Of 'Fake It ‘Til You Make It'
China’s GDP figures might show that the world’s third-largest economy is coming out of its funk. But few economists will take Thursday’s report at face value. While their caution is wise, the Middle Kingdom probably is recovering – tentatively.
By John Foley, breakingviews.com
Published: 3:16PM BST 15 Jul 2009
The country’s leadership has set a target of 8pc growth for 2009. Most economists believe the magic number will be hit, as do 88pc of investors in China, according to an ING survey. Reported growth in the first quarter was 6.1pc, and a 7.1pc “print” is expected for the second quarter, followed by above-trend growth in the second half.
But the GDP growth rate in China is too important a number politically to be reliable. From the bottom to the top of the data chain, everyone has a reason to report numbers that look politically correct. As economist Charles Goodhart pointed out, when leaders turn a measurement into a target, it stops being a good measurement.
Still, simpler indicators also point to recovery. Car sales rose 37pc in June. Electricity consumption rose 3.7pc, reversing May’s decline. Production of steel, diesel, speciality chemicals and even fridges are all back at pre-downturn levels. Exports are still falling, but a slower fall in imports suggests China's domestic consumption is recovering faster than that of its trade partners.
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THIS IS A LIE!
If you read between the lines, it says “due to stimulus spending” there economoy grew 7.9%.
This is another example of media trying to prepare us for a second round of stimulus spending, and make us think it worked for the chinese so it should work for us.
BULLSHHHHHHHH