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Ho Hum: China Economy Grows 6.1%

Posted by: Frederik Balfour on April 16, 2009

It’s all about managed expectations, I suppose. China announced its first quarter GDP growth figures today of 6.1% and most analysts just shrugged. Consensus figures were 6.2%, with a fairly narrow spread in forecasts, which makes sense, considering most people believe Beijing massages headline growth figures to meet official expectations anyway. For more on how China has cooked its books on GDP reporting, have a look at this BusinessWeek article I wrote in 2002

But it’s relative rather than absolute numbers that matter here, and as Deutsche Bank economist Jun Ma points out in a note to clients the implied annualized (seasonally adjusted) quarter on quarter GDP growth recovered sharply to 7.2% in the first quarter from 1.5% in the last quarter of 2008. That suggests the bottom has already been reached.

The stock market reaction was pretty tepid too. The Shanghai A Share index closed down nearly 2% on the day, which for China is a pretty modest move. Clearly investors have been anticipating a recovery in China for a while, and the index is up nearly 40% this year. Whether it’s a fool’s rally or not still remains to be seen, however.

The main reason China has managed to keep growing as much as it has is thanks to some serious pump priming. Fixed asset investment was up 28.6% in the first quarter, much of it in government-led infrastructure spending as part of the $586 billion stimulus package.
However as JP Morgan Chairman of China equities Jing Ulrich points out today investment in manufacturing and property sectors remain weak. This means the private sector is still wary of committing new cash, and will likely remain so for a while yet.

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Reader Comments


April 16, 2009 01:12 PM

this type of article really makes people sick, if Beijing always "massages headline growth figures" for so many years, why the outside analysts would give a damn about what Beijing has to say? In the end, it's just fabricating numbers. Then the author concedes a bit by saying even if the number is true, there is nothing to celebrate about, since most of the growth is from the stimulus package... what a nonsense, that's why the package is called stimulus package!


April 17, 2009 12:17 PM

Right on, Jay.


April 17, 2009 12:57 PM

China is going down big time.
Mark my words.


April 17, 2009 09:00 PM

Jay, you are absolutely right even 1001% absolutely right. Beijing had messages the headline growth for the last 30 years. The building in Shanghai, Guangzhou, Shenzen are just cartoon pictures. Do you know Beijing Olympic stadium does not even exist, they just photoshop it? I think they have successfully trick you that the stadium really exist in Beijing.

Yeah, I absolutely agree with you, there are no growth at all in China.


April 18, 2009 01:04 AM


What Balfour meant was a stimulus driven growth is like a person looking muscular by taking steroids. Stimulus (like Steriods) are not part of natural phenomenon and will any improvements as a result of such activities will abate once the influence of the stimulus diminishes. It is an artificial improvement (usually in case of withdrawal of steriods has a devastating effect on the body). Don't get so agitated, what Balfour has written is true.


April 19, 2009 10:59 PM


USA is dropping dead even before China goes down. The regular shootings in your crime infested country tell us all.

@ Jessica

bet you never had a chance to see outside your dilapidated rat-hole.


April 20, 2009 02:22 AM

china has built shanghai like a shiny mall and kept ppl confined in such ppl when I was an aid worker in Afghanistan I had to stop over at one of the real china type places the amount of poverty there is shocking!don't go by the propoganda machine and the guided tours of shanghai and beijing there is a groundswell of distrust and hatred against the PRC establishment packed choc a bloc with party princelings and rich business men.

frederik balfour

April 21, 2009 11:59 PM

For more on how China has cooked its books on GDP reporting, have a look at this BusinessWeek article I wrote in 2002


April 22, 2009 11:26 PM

There might be some truth that China cooked its book, but for the most time, it deflated its growth number to hide its strength. It was forced by IMF to correct its GDP upwards a few times. The real growth has been far more than being reported. Kind of scary



April 24, 2009 12:47 PM

The actual percentage of growth is not the issue here (no one would know it until the end of the year), at this point in time, the prediction is that the economies of Japan, EU and US are contracting, as opposed to China and India.


April 24, 2009 01:08 PM

Besides Madoff, Mr. Bush also cooked his own book: weapons of mass destruction.

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BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.

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