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This Chart Reveals How China Is Faking Its Economic Growth Figures

Economics / China Economy Mar 03, 2017 - 04:03 AM GMT

By: John_Mauldin

Economics

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.

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