More Impressive Economic Numbers for China

Posted by: Dexter Roberts on December 15, 2009

Beijing on Friday announced its economic numbers for November and analysts are saying they are good news for China as it coasts towards 2010. Strong economic growth continues to be powered by state spending through the $586 billion stimulus package as well as substantial lending (total credit and money growth was up 34% in November over a year ago) boosting industrial production a strong 19.2%. And there are signs of recovery in trade too, with imports up close to 27% in November. Even though exports declined 1.2% in U.S. dollar terms, this was a significant improvement from earlier in the year.

China’s people did their part, too: Retail sales grew a respectable 15.8%, albeit down from 20.8% of a year ago, and down slightly from the 16.2% pace of growth in October. And the mainland is even seeing inflation for the first time in nine months, with CPI inching up 0.6% in November over a year ago and producer prices up 0.6% from October. UBS China economist Tao Wang, in a Dec. 12 report, looks at the data and says China has a “strong economic recovery.” Adds China-watcher Carl B. Weinberg of High Frequency Economics, writing in a report dated Dec. 14: “We believe the economy is regaining its footing. GDP growth near 10% year-over-year is possible this quarter.”

But given China’s plans to keep priming the pump to drive its economy (as announced at the annual Central Economic Work Conference earlier this month), I’m worrying about how Beijing is going to wean itself off its loose fiscal and monetary policy and get domestic consumption to start playing a bigger role going forward—its long-touted goal.

One problem is already clear: an asset bubble in China’s red hot real estate sector. Despite Beijing’s announcements that it will take measures to cool growth (in part by extending the period of a resale tax from two to five years), many expect real estate prices to keep on soaring. November saw 5.7% growth in real estate prices across 70 major cities — the fastest since July 2008 - and even China’s top developers are warning of price bubbles in cities like Shanghai, Shenzhen and Beijing. China is facing “excessive growth in home prices in some cities,” which the government will take action against, the official Xinhua news agency reported yesterday.

Just as frightening is the prospect of even more excess capacity in China’s already glutted industrial sectors, like chemicals, cement, and wind power generation equipment. Take steel: Production is up 10.5% this year, and capacity is on track to exceed 700 million metric tons annually—about 200 million more than China consumes. I wrote about this problem as well as the potential it has to drive more trade spats going forward, in our most recent issue of Bloomberg BusinessWeek and many people are nervous—including China’s own officials - that overcapacity will get even worse over the next year.

Reader Comments

All

December 15, 2009 6:54 AM

How many times do we have to told that China and Chinese people are God's gift to this Earth. The rest of the world owes them living and prosperity. China is a most capable nation on Earth that can do nothing wrong. All we seek is China's mercy so we can survive on this Earth. China, please let us survive, while you please thrive. And yes, it is only fair for the Chinese to be embarrased when compared to India. After all according to a recent study completed by Genome Institute of Singapore, most asians (including Chinese) have Indian genes. That is because the first human migration into Asia started from India. India's influence on China (Yoga, Buddhism) is really embarrasing for China.

kuldeep

December 15, 2009 8:25 AM

part time job reqairment

Sharp 1

December 15, 2009 9:13 AM

I wonder how China is able to consistently clock such impressive economic numbers without millions of 'brilliant' Indians on H-1B/L-1 'temporary' guest worker visas.

Pang Lei

December 15, 2009 7:53 PM

Didn't property prices rise by 5.7% in November?

http://online.wsj.com/article/SB126044211353385043.html

All Non-Chinese

December 16, 2009 12:56 AM

Here goes another western media's usual China bashing. How many times do we have to be told that China and Chinese people are God's gift to this Earth. The rest of the world owes them living and prosperity. China is a most capable nation on Earth that can do nothing wrong. All we seek is China's mercy so we can survive on this Earth. China, please let us survive, while you please thrive. And yes, it is only fair for the Chinese to be embarrased when compared to India. After all according to a recent study completed by Genome Institute of Singapore, most asians (including Chinese) have Indian genes. That is because the first human migration into Asia started from India. India's influence on China (Yoga, Buddhism and now genes) is really embarrasing for the China.

All Indian nationalists

December 16, 2009 4:29 AM

China's so called impressive economic figures are all fake. How can China grow at all without the help of Hindu democracy? We all know that's impossible. So China will just collapse like the Soviet Union eventually and India will take over the world because India has the world's fastest growing population! China is nothing without Indian Yoga, Buddhism and now genes! India has already won the Asian auto derby and will beat the hell out of China in all other aspects of achievements. Not happening yet? Well, remember the story of the hare and the tortoise! India will surpass China in everything because China will collapse. India has democracy. India, not China, has invented the Tata Nano. India invented the zero. Indians are the wealthiest ethnic group in the US without whom Microsoft, IBM, Intel, Boeing, will go bankrupt. The US simply cannot function without Indians. The 21st century is the Indian century!

Xiang Yu

December 16, 2009 7:56 PM

I'm not surprised. As usual China proved to its doomsayers how wrong they were.

C. H. Ng

December 16, 2009 9:01 PM

One needs to travel to China to see for himself or herself the massive developments going on there & judge whether her impressive economic figures are true or fake. There is no need for the critics here to simply voice his or her skepticism w/o any substance or just becoz he or she is jealous of anything that is connected with China.

The other reason I can think of is that some of you anti-China critics are still living in your coconut shell. Please continue staying in your shell & keep on daydreaming or boasting how great your country is for all we care; that way we can be confident your country will continue remains as a laughing stock for us to enjoy.

chinese numbers ARE fake

December 16, 2009 9:53 PM

Becausr they are undemocratic they are able to fudge numbers.
What is more appalling tho is that these Western journos believe them.
'FOOL ME ONCE, SHAME on YOU'
'FOOL ME TWICE, SHAME on ME'

Taishan

December 17, 2009 1:52 PM

Before I started getting on BW blogs, I didn't even realize there was a rivalry between India and China. I don't mean to insult all those Indians out there, but the rivalry between China and India will fade into the history books. Same with any rivalry between China and Japan. The reason it will fade, is because the word "rivalry" means a competition of EQUALS. India just isn't developed enough, and Japan isn't big enough. In the long run, China will have tensions and rivalry with the Western world. The rivalry will not lead to conflict or even trade wars, but definitely strong feelings of suspicion on both sides as China grows in influence. We can already see that at Copenhagen where China is squaring off with the US on climate changes. So, I dunno, seems silly to me all these comments made by Indian posters.

Henry L.

December 18, 2009 2:09 PM

@Taishan. India may not be in the same league as China today but she definately have the potential to be equals in the future. You are right in that Japan although technologically a heavy weight, lacks the land mass and population. India on the other hand definately have the people and the land mass. I think what's sad about the Indians is that they think that they're already ahead of China.

jim

December 18, 2009 10:27 PM

@chinese numbers ARE fake: "Becausr they are undemocratic they are able to fudge numbers.

Yes, there is such a possibility that Chinese statistics can be fake, but that has nothing to do with being 'democratic' or otherwise. I really do not see your logic. In my short life, I have seen and heard a lot of fake stuffs, such as WMD, the domino theory, the profits of Madoff, the tremendous earnings of Enron, etc. What I do know is that China used real greenbacks to buy 800 billion dollars worth of U.S. Treasurys, lifted hundred of millions of its citizens out of poverty, real merchandises filled Walmart and Costco, and they have plenty of Boeing aircrafts on their new runways. They also financed their economic recovery with real cash, and we only printed fake greenbacks to finance our recovery (inflation is coming soon!) They also managed to buy Siemens technology for their Shanghai 'bullet train', built railroads and highways. If that is not real, what is?

Taishan

December 19, 2009 5:22 PM

To Henry L. : Yes, I agree, India has the potential to rival China someday, but not in this era and certainly not in my lifetime. Not until India reaches a point where there is heavy infrastructure improvement across the nation. If you look at Japan and the Asian Tigers in post WWII and the Western nations prior to WWII, they all went through a massive infrastructure build similar to what China is experiencing now. Whatever the underlying reason, there was tremendous cooperation (however tense) between government and private industry to build infrastructure and to build it rapidly. In the West, New York City is a good example that went through that phase from the late 1800's into the early 1900's. During that era, once it was discovered that steel was a better building material than bricks, construction went unabated for over 60's until the Great Depression. A similar situation is happening in cities like Shanghai, Beijing, etc. But I don't see something on that scale in New Delhi or Mumbai. Or at least, not to the level that would put India into developed world status. In my life time, India, at best, will become a giant Brazil or Mexico whereas China will become a giant Japan or Germany.

Taishan

December 19, 2009 5:30 PM

To chinese numbers ARE fake: The Chinese can fake number that are internal to their own country. However, China cannot fake how they impact the outside world. From oil extractions out of Africa, to soybean imports from Brazil and to iron ore imports from Australia. Or even the fact that GM now sells more cars in China than in the US. There are so many areas where China's trade arm reaches, that it would be nearly impossible for China to fake her numbers even if she wanted to. Its not only nearly impossible, it is impossible. If the Australians have an open pit to sell ore to the world and an equal or larger size pit to China, doesn't that tell you something? Unless of course, a Japanese ship picking up iron ore is claiming to be Chinese. But then, what would be the incentive of the Japanese customer to claim to be Chinese?

Business Nguyen

December 22, 2009 2:47 AM

Yes, anything is possible in future. If India can be equal to China, I would believe in anything, like sub-Saharan countries can be richer than Europe.

Balaji Viswanathan

December 28, 2009 1:47 AM

@Henry L.
"Indians is that they think that they're already ahead of China."
Let's not assume India (or China or US) is represented those in the BW blogs. I have traveled quite a lot in India, and I also have a lot of Chinese friends. Except for a minuscule nationalists, I don't think many Indians are thinking ourselves as ahead of China, and I notice very little tension in Indians-Chinese friendships in the US. And most of our media (particularly at regional level) are more in awe of buddies China who have done remarkable things in economy in the past 30 years. As you would know, many Internet forums are massive swarms for extremists who use the cloud of anonymity to talk crap. If the common Indians (and Chinese and Americans) are as nationalist as those here, world have already gone in WW-III. :-)

SK

January 9, 2010 12:54 PM

Infrastructure isn't a holistic sign of development. Out of 25 gates in Shanghai airport, only 2 are in use. Who's paying for maintaining the other 23? 50% of Shanghai skyscrapers are EMPTY. So much for building a skyline, but WHO'S paying for lighting up those empty buildings? In this world of connectivity and free exchange, world's biggest espionage and information filtering is taking place in China. Its Stock market is run like a rigged casino, and its banks are virtually insolvent cause they are backed by the Govt. Ask any country's citizens would they choose more money or freedom, i guess, you know the answer. Peace

C. H. Ng

January 10, 2010 10:32 PM

@ SK

Here are my answers to your comments:-

1) Infrastructure is INDEED A SIGN of development. What holistic you are talking about? Are you a priest or a preacher or something else?

2) Only 2 gates out of 25 in Shanghai airport are in use -- maybe you are right...I don't know; I didn't noticed it when I was travelling there.

3) 50% of Shanghai skyscrapers are empty -- again I cannot argue with you as I didn't bother to take note of it; I was more interested looking at those beautiful girls in Shanghai than those cold concrete/steel structures.

4) All the biggest espionages & information filterings are taking place in China -- REALLY?? What about those in your country (btw which country you are from?)? What about the CIA of USA or KGB of Russia or the Bristish Mi5 or Mossad of Israel and etc..etc? Are they not equally or more famous for their activities? As for the news filtering, are the CNN or BBC totally "clean" on all their news reporting?? Nothing biased??

5) China's stock market is run like a rigged casino -- I agreed with you their government has the influence to determine how they want the market to flow but not the choice of the word used. "Rigged" is too strong a word but you have your rights anyway....

6) Its banks are virtually insolvent as they are backed by the government --
well is that NOT A GOOD CHOICE or A GOOD PLANNING anyway? Or you prefer rather than to let your country's banks virtually on a verge of collapse only for your government to come to their rescue but by then all confidences have being wiped out and businessed failed?

7) Choice between money or freedom -- if you ask me, of coz ALL people of sane mind would WANT ALOT OF MONEY & THE FREEDOM TO SPEND IT. What is money if you don't have the freedom to spend it and what is freedom if you don't have money to spend?? In this current materialistic world we are living, NO MONEY, NO TALK......!

NB: PEACE WITH U TOO & ALL THE PEOPLE IN THIS WORLD.

@ chinese numbers ARE fake

January 11, 2010 3:43 PM

'FOOL ME ONCE, SHAME on YOU'
'FOOL ME TWICE, SHAME on ME'

Since it's definitely the second that you've been fooled on my count in BW, so you were saying shame on you?

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