China’s Growth Is Good For The World
China’s growth slowed in the last quarter but actually picked up in September. If the pick up continues China stocks could offer excellent value.
Investors have this year worried about Greece and some other European countries but the growth of China produces four new Greece’s every year. Thus a slow down in China would have a far bigger effect on World GDP than a potential slowdown in some of Europe’s countries. China growth is good for the World and I believe offers excellent investment opportunities.
It’s interesting to observe the difference between what pessimists predict about China’s economy and what’s actually going on in the country. In the eyes of bearish economists, China seems to be the worst-performing economy and is in trouble with nightmares to come, but in fact, it is still the fastest-growing economy among the Group-of-20 members, with an economic growth rate of over 7 percent this year.
Compared with other major economies, China’s growth is enviable, even if its economic growth slows to between 7.0 percent and 7.5 percent given its size as the world’s second-largest economy.
China has more firepower in its policy ammunition to spur up economic growth than European countries and the United States.
The more pivotal question now is how the Chinese government can maintain a balance between stabilizing short-term growth and leaving room for sustainable and more healthy development in the long run after policymakers took measures to boost foreign trade and approved massive infrastructure investment plans worth more than 1 trillion yuan (158 billion U.S. dollars).
The Chinese government is aiming to increase domestic retail sales by 15 percent annually to reach 32 trillion yuan by 2015.
Some may query China’s data but use electricity consumption, rail freight traffic, petroleum consumption, the official PMI index and bank loan growth as bottom-up indicators of GDP growth.
In each case, we find that these indicators’ recent values are consistent with higher GDP growth than what has been reported this year. If anything, therefore, officials appear to be shading growth figures downward to be consistent with the official target of 7.5% growth rather than offering an overly rosy view of the economy.