Wednesday 22 April 2009


THE FALSE PROMISE OF CHINA'S MAGIC 8 BALL

Tina Wang

Forbes, April 22, 2009

After months of skepticism, analysts are starting to think that China may actually reach its coveted 8% growth figure. But the headline GDP story has an element of false promise for investors, as stimulus spending and a credit boom protect output but not industrial profits.

Few had thought that China could actually reach its official 8% goal, and only in January, Chinese Premier Wen Jiabao acknowledged that it was a "tall order" during the World Economic Forum in Davos. But on Wednesday, Goldman Sachs dramatically revised its full-year GDP forecast for China to 8.3%, from 6.0%. Other analysts have done the same, forecasting 2009 growth of 7.0% to 7.5%, compared with previous estimates of 5.5% to 6.5%.

China's acceleration of industrial production and fixed asset investment in the first quarter, particularly in March, has taken many by surprise. That rode on the back of a record expansion of credit, and a faster-than-expected trickling down of Beijing's half-trillion dollar stimulus measures (See "China Bound For A Rebound?" and "And Beijing Said: Let There Be Loans").

The surprisingly strong government data has led some to question its veracity. "The acceleration is so dramatic that it raises the question of whether the numbers are too good to be true," CLSA economist Eric Fishwick wrote in a note. "Obviously, China in the past has misstated figures during deep recessions," he said in an interview. But this time, "there is nothing that I have seen in Chinese data in general that makes me think there are serious data integrity problems...Any economist has to take data published as accurate, unless there is overwhelming evidence to the contrary."

(...) [artículo aquí]

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