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Economic growth

This tag is associated with 42 posts

Understanding the two Chinas


Our view that China may be heading for a mild cyclical upswing next year needs to be set against the background of the broader economy, which is changing rapidly. We think that it makes sense to view the economy as consisting of two parts: old and new. In its latest Five-Year Plan—full details of which … Continue reading

China’s economy is worse than you think


The unreliability of Chinese official economic data has become almost a cliche. A few years before he became China’s premier, Li Keqiang said that the country’s numbers were “man-made” and “for reference only.” If the top economic policy maker of a country says that the numbers aren’t reliable … well, you believe him But how unreliable? … Continue reading

What could really disrupt China’s economy?


In an earlier post, I explained why I’m still bullish on China’s economy. But as the events of the past few months have shown, the risks of economic disruption are real. Here are several potential risks that could throw China’s economy off track. While the likelihood of all of them occurring is low, they are … Continue reading

Chinese SOE chairman says China has won the stock market war against western financial giants


The following is based on a translation of an article in Chinese media: China’s official mouthpiece the Global Times published an article by Lin Zuoming, Chairman of the Board of Directors of China’s State-owned giant Aviation Industry Corporation of China (AVIC), on the recent disturbance in China’s stock market. The head of any large state-owned … Continue reading

International investors are pulling out of China in favour of India because of China’s interference in stock market


The tumult in China’s stock markets has turned into a blessing for Indian shareholders. International investors are pulling out of China, fuelling record outflows through the Shanghai-Hong Kong exchange link, amid a $2.8 trillion plunge in mainland equity values since June 12. They’ve ploughed $705 million into India over the same period, sparking a world-beating … Continue reading

India to beat China again as fastest-growing economy in 2016 says IMF


India will be the world’s fastest growing economy for the second consecutive year in 2016 at 7.5 per cent, IMF today said, even as it lowered its current year global economy growth forecast to 3.3 per cent. In its World Economic Outlook Update released here, IMF retained India’s growth projection for current year at 7.5 … Continue reading

This is how China is trying to save its economy


China has had 35 years of hypergrowth, but now it’s over. It’s going to have to settle for really, really good growth instead. But that’s still going to be hard now that fewer Chinese are working-age, fewer people are moving to the cities and, most of all, now that China has a debt bubble it’s … Continue reading

Putting China’s debt into perspective


China’s total debt quadrupled between 2007 and 2014, which was about one-third of the $57 trillion in debt added globally during that period. Can this possibly be safe? To answer this question, the McKinsey Global Institute devotes an entire chapter to China’s debt in the new report Debt and (not much) deleveraging. The key issue … Continue reading

Productivity, not reproductivity, must be the new driver of Chinese growth


Around a quarter of China’s remarkable economic growth over the past three decades or so was delivered by the dividend from its demographic structure, with a young population augmenting the workforce and lifting output in new jobs. A large proportion of the population were of working age; the proportion of the young and the old … Continue reading

What’s behind the surprise drop in Chinese exports?


China’s exports for the month of March fell by 15% from a year ago (in dollar terms), the General Administration of Customs said today. It was a big surprise to markets and investors, who were expecting a rise of as much as 12%. Imports also dropped, by 12.3%, although that was in line with expectations. As a result … Continue reading

China’s long-awaited day of reckoning is close


All the devils have come together for the Chinese economy and the country’s “long-awaited day of reckoning” is upon us, writes Societe Generale analyst Wei Yao in a recent note. To China bears who’ve said that the country is a debt bubble, Wei’s conjecture will seem obvious. To bulls it raises another question: Where would … Continue reading

China argues it’s not really world’s largest economy


China‘s statistics agency said Tuesday that the International Monetary Fund is wrong in saying China has topped the U.S. as the largest economy in the world. According to the latest IMF figures based on purchasing power parity, China produced $17.6 trillion in goods and services in 2014, surpassing the U.S.’s $17.4 trillion. But China’s National … Continue reading

China to expand unemployment benefits to lure migrants to cities


Urbanisation is now one of the key issues of Chinese President Xi Jinping’s further thorough economic reform. It will greatly expand domestic market and thus boost substantial economic growth, but the resistance of vested interests is very strong in opposing the reform in China’s hukou system that prevents rural migrant workers from settling down in … Continue reading

Why China keeps throwing trillions in investments down the drain


A recent study performed by two economists affiliated with a Chinese state agency found that China’s state investments have becoming alarmingly wasteful and ineffective. There are two indisputable facts about China’s mammoth investments in its infrastructure and factories. One, they are a growth engine, accounting for roughly half of the country’s GDP increase since 2000. … Continue reading

China PMI steadies, but doesn’t dispel growth worries


Activity in China’s factories increased marginally in April but export orders fell sharply, a government survey showed on Thursday, adding to questions about whether the world’s second-largest economy is stabilizing after its first-quarter slowdown. The data came a day after Premier Li Keqiang pledged to step up support for the trade sector, adding to measures … Continue reading

China’s premier warns on economic slowdown


Chinese Premier Li Keqiang warned on Thursday that the economy faces “severe challenges” in 2014 – comments that came as weak data fanned speculation the central bank would relax monetary policy to support stuttering growth. Li, speaking at a news conference on the final day of China’s yearly parliament, hinted Beijing would tolerate slower economic … Continue reading

Final China HSBC PMI dips to six-month low in January as new orders weaken


Business conditions for China’s manufacturers worsened in January as output and new order growth weakened, a private survey showed on Thursday, pointing to a weak start for the economy in 2014. The Markit/HSBC final manufacturing PMI for January dipped to 49.5 from December’s 50.5, the first deterioration in six months. The figure was in line … Continue reading

China needs 10 million new jobs a year to survive


The Chinese economy needs to create 10 million jobs per year and must sustain growth of at least 7.2% to achieve that, Premier Li Keqiang has warned ahead of a key meeting of the Communist Party. Li’s comments, in a speech published Monday on the website of the All China Federation of Trade Unions, indicate … Continue reading

Australian Treasury too rosy about China


In October 2009, a former top Treasury official at the Australian embassy in Beijing slammed the Rudd government for a “dysfunctional China policy”. Stephen Joske went further, saying “there’s no one in Treasury who can tell up from down on China, beyond what they read in the newspapers” – a serious charge given the importance … Continue reading

Will China’s economy crash?


After many years of euphoria over China’s rapid growth and the country’s apparently inevitable rise to global economic dominance, the China story has taken a serious turn for the worse. China, it now seems, is about to collapse, and along the way it may well bring the world economy down with it. Fortunately, the new … Continue reading

China urges local governments to speed up spending to support the economy


China urged local governments on Thursday to speed up spending this year’s budget to support economic growth but said it would keep overall policy stable and focus on pushing through reforms. Beijing is reluctant to take broad action to stem a slowdown in the economy, such as relaxing monetary conditions, but analysts said there had … Continue reading

Uneven economic growth in China’s regions


When looking at Chinese growth, it’s easy to think of the country as one entity, and one figure. Will GDP expand by 8 per cent this year, or “just” 7? However, China is a bit bigger than just one number. With a fifth of the world’s population in the fourth biggest country by area, distributed over many … Continue reading

Surging wages threaten Chinese competitiveness


China’s surging wages and costs are showing signs of undermining the competitiveness of the nation’s economy, threatening its growth potential, the Asian Development Bank said. Average inflation-adjusted wages have more than tripled in a decade and non-wage costs for procedures such as hiring and firing have risen since the introduction of a 2008 labor law, … Continue reading

Australia warned of double whammy in China’s pending debt crisis


A major Asian investment bank says the seeds of a future financial crisis in China have been sown. Nomura is warning that debt levels in China are teetering at unsustainable levels. Debt in China is believed to be between 150 and 200 per cent of GDP, pushed up by easy monetary policy the government has … Continue reading

The danger of Chinese overproduction


Coal, iron ore, steel, cotton, clothing, heavy equipment, ship-building, solar cells, LEDs, and property. All of these commodities at one point or another in the last year have been a hot topic due to overstocks caused by government-influenced overproduction. Falling prices and decreased global demand have crippled many participants in these industries, and many bankruptcies … Continue reading

China economy shows signs of strength


China released a series of figures on Sunday showing continued economic strength as it prepares for new leaders tasked with sustaining the country’s dramatic growth. There was a double-digit increase in production at factories, workshops and mines for the first time since March, the National Bureau of Statistics said, a strong sign the country is … Continue reading

Citibank forecasts a reversal in China commodity, growth patterns


In his latest note Citi‘s Edward L Morse writes “the commodity super cycle is over.” That is a monumental call, given how popular the long commodities trade has been. Why the turn? Basically, it’s all got to do with China. First, the economy is slowing down, and second as China rebalances its economy it is … Continue reading

Bank of America is bullish on China


Merrill Lynch‘s China economist Ting Lu just published a big bullish 11-page report in which he cranked up his GDP estimates citing “across-the-board green shoots. “Here’s a summary of his revisions: 4Q12 year-over-year GDP growth to 7.8% from 7.5% 2012 annual GDP growth to 7.7% from 7.6% 2013 annual GDP growth to 8.1% from 7.6%, … Continue reading

China inequality causes unease


Despite more than 90% of Chinese feeling that they enjoy a higher standard of living than their parents, concerns over corruption, social inequality and food safety are growing, according to a Pew Global Attitudes Survey. Most presidents and prime ministers would love to have the kind of GDP growth China‘s incoming leader Xi Jinping will … Continue reading

China approves $157-billion infrastructure spending to pump flagging economy


China has given the green light for 60 infrastructure projects worth more than $150-billion as it looks to energise an economy mired in its worst slowdown in three years, fuelling hopes the world’s growth engine may get a lift from the fourth quarter. Shares and steel futures contract prices jumped on the plans to build … Continue reading

China’s Rail Cargo Volume Just Turned Negative For The First Time Since 2009


China‘s vice premier Li Keqiang was widely reported to have said that China’s GDP figures are not reliable.  According to Reuters, he is said to be relying on electricity consumption, rail cargo volume, and banking lending. In case you have not been watching, the rail cargo volume growth on a year-on-year basis has just turned negative in … Continue reading

China: Downturn pressure unexpectedly great in Guangdong


Guangdong, a pioneer province for reform, is now under unexpectedly great economic downturn pressure. In its report yesterday, China’s official media chinanews.com reported that “Guangdong Governor Zhu Xiaodan was at a meeting to analyse the economic situation in the first six months this year, held on July 11 by the provincial government. Zhu said that … Continue reading

Flaws in China’s economy mean tough times ahead


Shujie Yao says serious structural flaws in the Chinese economy mean the days of near-double-digit growth are over. The nation must now prepare for three years of hardship, which will be felt by the rest of the world. The world’s investors sift through the semantics of China‘s economic policy pronouncements with increasingly desperate optimism. As … Continue reading

China eschews fiscal fanfare for supportive spending


China‘s focus on fine-tuning monetary and fiscal policies to fight the risk of a sudden economic slide worries investors pricing in a sixth successive quarter of slowing growth with no obvious sign of the solid stimulus they want. With domestic activity stifled by government curbs on real-estate speculation, the potential damage to demand for China’s … Continue reading

China’s Wen urges more support for growth


China‘s premier called for additional efforts to support growth on Sunday, signalling Beijing’s willingness to take action after a recent series of economic indicators suggested that the world’s second-biggest economy will slow further in the second quarter. “We should continue to implement a proactive fiscal policy and a prudent monetary policy while giving more priority … Continue reading

China second quarter GDP growth seen at 7.5 percent


China‘s annual economic growth could slow to 7.5 percent in the second quarter, largely due to curbs on the property sector and headwinds from external demand, the State Information Center, a government think-tank, said in a report published on Friday. If the GDP forecast is accurate, growth in the second three months of 2012 would … Continue reading

China’s ‘epic’ property bubble about to burst


Notoriously bearish on China, Kynikos Associates president Jim Chanos is continuing to caution investors to brace for China’s real estate bubble to burst. The hedge fund manager also sounded the warning bell about the outlook for Chinese inflation. “We’re bearish on China’s property sector and the credit sector,” Chanos told CNNMoney at the Milken Institute … Continue reading

The risks of a Chinese hard landing


With the Chinese economy seemingly in the midst of a fairly soft landing, global investors have not been paying much attention to China in recent months. However, all that will change as a result of the extremely weak Chinese activity data for April which were published last week. Asian equities and commodity prices have already … Continue reading

China growth risks signal need for fiscal action


China may need a back-up plan to stop economic growth being cut short by a surprise dip in demand at home and abroad that suggests monetary policy easing steps taken since the final quarter of last year are insufficient to deal with the downturn. The People’s Bank of China cut the amount of cash that … Continue reading

World looking to China to lift growth


With the United States struggling through a soft patch and Europe battling recession, China may come to the rescue by demonstrating a resilience that would provide comfort in a sea of economic uncertainty. China, the world’s second largest economy, is looking ever more vital to maintaining global economic momentum, and a raft of data to … Continue reading

China April HSBC services PMI rises to 6-month high


China‘s services sector enjoyed its busiest month in half a year in April, with business expectations at their highest level in 12 months, a private sector survey of purchasing managers showed on Friday. The seasonally adjusted HSBC China Services Purchasing Managers Index (PMI) rose to 54.1 in April from 53.3 in March, its strongest reading … Continue reading

China factories bottoming out, HSBC PMI signals


China‘s manufacturing sector showed fresh signs of bottoming out in April, with export orders ticking up, but activity still contracted for a sixth consecutive month, according to a private sector survey on Wednesday. “The seasonal rebound this year was much weaker than that in the past, suggesting growth momentum remains soft,” Barclay’s Capital analyst Yiping … Continue reading

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