A (2007) GDP Restatement & A Bumpy Future.

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Back in 2007 we reported on how China restated its 2006 GDP figures, and suggested that statistics be treated with caution. Now Xinhua has just reported another revision, this time for the 2007 GDP figure:

    “The National Bureau of Statistics released a revised growth rate for 2007’s gross domestic product.
    It went from 11.9 percent to 13 percent after a final reassessment.

    The GDP went up 777.6 billion yuan to 25.7 trillion yuan or 3.78 trillion US dollars.

    The revised figures now show the industrial sector achieved the fastest growth followed by the service and trade sector and then agriculture.”

    Time to update all those PowerPoint slides again!

    But what about 2008 and 2009? The projected GDP figures keep going down (as we reported here), along with much of the world economy. The brains at the World Economic Forum think that China’s slowdown may present a danger to the world economy:

    “…among the most pressing risks highlighted by the Forum’s Global Risks report is the increasing likelihood that China suffers a hard landing this year.

    The country has been the powerhouse for worldwide economic growth in recent years, reliably turning in double-digit gross domestic product growth, but 2009 could be very different, according to one of the report’s authors, Daniel Hoffman, chief economist at Zurich Financial Services.

    “We would define a hard landing for China as being below 6pc, and we all know that while China is trying to do everything it can to prevent that from happening it looks more and more likely,” he said.

    …Economists’ hopes that China and the rest of the emerging economy would help support the global economy through the recession have been dashed in recent weeks by a flurry of data suggesting these countries are fast being hit by the fall in demand for their goods. Some now suspect that China could even see its GDP shrink this year, as it is hit extremely hard by the global slump in demand.”

China is working hard to keep things running on target. Further to the announcement of the massive stimulus package, The Wall Street Journal notes Premier Wen Jiabao’s recent announcement that:

    “We will accelerate and bring forward the parts of the 600 billion yuan ($88 billion) of planned investments on 16 major projects, under our mid- and long-term development plan for science and technology, that are closely linked to the economy now”.

China is also updating plans for its traditional, southern industrial base, as reported by AP:

    “China has updated an ambitious blueprint to aggressively revamp the country’s key manufacturing region — a plan that has already helped cause many low-end factories to move or shut down.
    The sweeping new plan…covers the next 12 years and targets the booming Pearl River Delta in southern Guangdong province. The National Development and Reform Commission says the general goal is to transform the region into a base for advanced manufacturing, innovation and heavy industry.
    The plan calls for the creation of 10 China-based multinationals, each with annual sales of 20 billion U.S. dollars by 2020. It will be home to two to three big automakers with output worth more than 100 billion yuan (US$14.6 billion) each by 2020.”

More news on more initiatives can be expected. But it remains to be seen how the economy will land. It seems a long time ago (April 2007) that Standard Chartered reported “This economy has not landed – it has refuelled in mid-flight and is flying higher again”.

But these days it is William Overholt’s 1990’s comment springs to mind again…that China would not have a hard or a soft landing, but would most likely have a bumpy one.

Even that evaluation may now seem optimistic to some. Hang on!

One Response to “A (2007) GDP Restatement & A Bumpy Future.”

  1. Archive » A Dose of Medicine for Slowing GDP| China Business Blog Says:

    […] the global slowdown continues, China (in contrast to the recent upward restatement for 2007) is showing signs of slowing – in the last quarter of 2008 GDP growth was 6.8%, which is slow […]

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