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China State Fillip Sends Gdp Soaring To 7.8%

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http://business.timesonline.co.uk/tol/busi...icle6715807.ece

China’s economy rebounded in the second quarter, boosted by a surge in state spending and in bank lending, setting the scene for the biggest emerging economy to lead the world out of the worst global downturn since the Great Depression.

Economists had expected the economy to show some strong improvement as a huge 4.0 trillion yuan (£365 billion) government stimulus package announced last November began to take effect, but few had foreseen that annual gross domestic product (GDP) growth would accelerate in the second quarter to 7.9 per cent, up from 6.1 per cent in the first quarter.

That made China the world’s the best-performing big economy. It is now the third-biggest in the world.

There was growth from several sectors of the economy, including investment in fixed assets in urban areas in the first half and in June industrial production. Retail sales, a rough proxy for consumption, rose 15 per cent in June from a year earlier after May's 15.2 per cent increase.

Zhu Jianfang, chief economist of Citic Securities, said: “The data showed the economic recovery is stronger than expected. There will be no suspense about achieving the government's goal of 8 per cent GDP growth this year.â€

The 8 per cent figure is crucial to the ruling Communist Party, which regards that number as the minimum needed to hold down unemployment.

Li Xiaochao, spokesman for the National Bureau of Statistics, said the impact of the stimulus package had been remarkable. “Our economy is continuing to turn for the better and there are more and more positive factors. We see more people shopping and prices beginning to rise. The economy is recovering and the recovery is intensifying. All the government's policies have worked together to help us overcome the financial crisis."

Some economists said the data showed China had achieved a V-shaped recovery, with a carefully managed shift to greater domestic demand helping to offset the plunge in exports. Since 1978, China has averaged GDP growth of close to 10 percent a year, but the government has had to ramp up spending and shift to extremely loose monetary policy to put the country on track for its official target for 2009.

In addition, consumer prices in June fell 1.7 percent from a year earlier, giving Beijing a freer hand to keep spending on its stimulus without a danger of adding to pressure for prices to rise.

And spokesman Mr Li warned that many problems were still waiting in the wings. “Policies to maintain growth have achieved very clear results, but the foundation for recovery is still not solid. The recovery is not fully balanced so there are some regions that have not done as well as others."

8% YoY growth is sustainable in the long term.

The Chinese are certainly throwing money at the problem.

Question is how much of this rebound is funded by companies / individuals taking on unsustainable debt?

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They now have the 2nd biggest stock market worldwide.

China’s Market Value Overtakes Japan as World’s No. 2

http://www.bloomberg.com/apps/news?pid=206...id=a_84o9PPPGqk

July 16 (Bloomberg) -- China overtook Japan as the world’s second-largest stock market by value for the first time in 18 months, after government stimulus spending and record bank lending boosted share prices this year.

Meanwhile...

China’s PBOC Sells Bills at Highest Yields This Year

http://www.bloomberg.com/apps/news?pid=206...id=a6JBIhezEBnQ

July 16 (Bloomberg) -- The People’s Bank of China sold one- year and three-month bills at their highest yields this year, pushing up money-market rates to curb record growth in lending.

The one-year yield rose almost 10 basis points, or 0.1 percentage point, to 1.595 percent, according to a central bank statement.

Watch this space :ph34r:

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Is it possible that all the inflationary measures in Western economies could ultimately end up stoking inflation in China instead (and thus having less inflationary effects here) ... just like Japan inadvertently exported inflation from the policies that they were trying to use to fight their deflation?

Would the Chinese be stupid enough to let it happen to them?

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What's the inflation rate?

http://www.tradingeconomics.com/Economics/...aspx?Symbol=CNY

China Inflation Rate

China Inflation Rate chart, historical data, forecast and news. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy.

China-Inflation-Rate-Chart-000001.png

Negative according to this. Do the Chinese have any other inflation measures?

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They now have the 2nd biggest stock market worldwide.

China’s Market Value Overtakes Japan as World’s No. 2

http://www.bloomberg.com/apps/news?pid=206...id=a_84o9PPPGqk

Meanwhile...

China’s PBOC Sells Bills at Highest Yields This Year

http://www.bloomberg.com/apps/news?pid=206...id=a6JBIhezEBnQ

Watch this space :ph34r:

yep Schiff may yet be proved correct, regardless of those that say it never can happen, it is happening!!!

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