This Chart Reveals How China Is Faking Its Economic Growth FiguresEconomics / China Economy Mar 03, 2017 - 04:03 AM GMT
BY KEVIN BREKKE : China ended 2016 with 6.8% annualized GDP growth for Q4 that let it log 6.7% growth for the year. Among other things, Beijing’s data divas were eager to report that fixed-asset investment (FAI) had jumped 8.1% last year.
But a quick dissection of that number reveals that a surge in FAI by state-owned enterprises (SOE) saved the year.
Fiscal stimulus was laundered through state firms to moderate fears that the economy lacked self-sustaining vigor.
This credit-fueled fixation on hitting short-term growth targets in lieu of long-term structural reforms is not sustainable.
Fitch estimates China’s credit growth climbed 16.1% in 2016, and forecasts that GDP growth will fall to 6.4% this year and 5.7% in 2018.
Subscribe to Free Investment Newsletters from Mauldin Economics
Become the best investor you know. When you understand how current events are connected, you can prepare for what’s going to happen next. Sign up for Mauldin Economics’ free weekly newsletters for a bird’s-eye view of emerging profit opportunities and macroeconomic reality.
John Mauldin Archive
© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.