Sunday, October 21, 2012

Renewed Optimism On China Is Set On A Shaky Foundation




On Thursday, Beijing’s National Bureau of Statistics (NBS) announced that the Chinese economy grew 7.4% in the third quarter, Forbes reports..  That was down from 7.6% in Q2 and 8.1% in Q1.   It was the seventh-straight quarter of declining growth and a 14-quarter low.  Moreover, growth for the first time fell below Premier Wen Jiabao’s full-year target of 7.5%.

The consensus of observers, however, is that the worst is over.  As a CNBC headline put it, “Suddenly, Everyone’s Turning Bullish on China.”  Now, it appears, the only argument is over how strong the recovery will be.   If you’re Zhiwei Zhang, you’re ecstatic.  “Growth will rebound sharply in the fourth quarter,” the Nomura economist wrote.

Others are more cautious.  “We expect growth to bottom out in the third quarter, before mounting a gradual recovery that sees the economy expanding by 7.75% this year and 8.25% next year,” writes Anoop Singh, the IMF’s Asia-Pacific director……….



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