Filed under: International markets, China, Economic data
In the weeks ahead, BloggingStocks will take an in-depth look at China’s economic expansion, its impact on the global and U.S. economies, and also review a few stocks likely to benefit from China’s development.
China’s announcement that its economy grew at annualized rate of 11.5% in Q3 has done nothing to quell economists’ concerns that its economy is growing too fast for both the betterment of its mainland citizens and international markets/commerce.
China’s government points to a “successful” slowing of the economy in Q3 to 11.5% from 11.9%. But the minor GDP drop was not what economists were looking for. Economists would have rather seen a Q3 GDP growth rate of 8% or 9% — i.e., a 15%-25% drop in the rate of growth as evidence of a slower economy. Further, little in China’s Q3 report indicated that the country is correcting macroflaws in the economy — namely, too much heavy industry, high energy use, and a dependence on export sales, to go along with another serious flaw: domestic underconsumption.
Regarding the latter, China has taken some measures to help its middle class expand, and domestic consumption is rising. But domestic consumption still is not large enough: China said domestic consumption has accounted for about 37% of economic gains so far in 2007, down from 39% in 2006. In other words, China is still not at a point where consumer spending can support its economy, and also stimulate growth in other countries through the purchase of foreign goods and services.
Continue reading China’s continuing giga-GDP growth
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