Can Good Numbers Be Bad?

Related entries: Economy, General, Investment, News

The Chinese economy managed 7.9% GDP growth in the second quarter, and may be on course for the official 8% 2009 target:

• GDP up 7.9% in Q2 – WSJ: China’s GDP Growth Accelerates on Stimulus 8:17 AM Jul 16th from TweetDeck

But it is not without challenges, and not all are convinced by the good numbers.

• An expert look at the latest numbers RT @DanHarris: China’s economy clearly explained. 7:53 PM Jul 16th from TweetDeck

Michael Pettis wrote (see link above): “Was China’s “surprisingly” high GDP growth numbers a big surprise? Not really. I have argued several times since last year that in fact China can achieve very high growth numbers by throwing a huge amount of resources into achieving short-term growth, but the real question is whether these policies are sustainable and whether the kind of growth they achieve is in China’s best interest.

…In my opinion, these policies involve such a huge expansion in fiscal debt and especially in new bank lending that they are certainly not sustainable…”.

Meanwhile, the flow of data on other issues continues:

• FDI US$43 bn in H1. Some good stats on FIEs here. RT @China_Daily: China’s FDI falls 17.9% in first half 1:20 PM Jul 15th from TweetDeck

• It’s an FX record. And a problem – Forbes: China’s foreign reserves rise to $2.13 trillion 7:59 AM Jul 15th from TweetDeck

• High, but how long? RT @China_Daily: Chinese shares hit 13-month high 4:36 PM Jul 14th from TweetDeck

Is it sustainable? Or do risks lurk around the corner?

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