Tuesday, March 06, 2012

China's Economic Growth is Whatever China's Government Says It Is

Construction sites across Guangzhou used to be floodlit, so that work could continue through the night on the forests of new residential and office towers reaching toward the stars. But now, during a nationwide real estate downturn, builders are not starting projects or scrambling to finish ones already under way, so there is little need for night-work illumination.

The Chinese economy, after nearly three decades of rapid, almost uninterrupted growth, seems to be settling down to a still strong but less blistering pace. But some sectors are struggling, including exports and luxury residential real estate construction.

Shop clerks in a wholesale market complained about the scarcity of customers. At a factory gate, workers said that few jobs were available except at the minimum wage. And at an employment office, the jobless fretted that even if they found work, they would have little hope of buying apartments typically priced beyond their means.

Su Weizhong and three other clerks late Monday morning stood at a desk with little to do at a plumbing supplies store in the wholesale market.

“A year ago, there were people in every shop, looking and asking about the prices,” Mr. Su said. “Projects are finishing, but there are absolutely no new projects this year.”

With China having been the world’s main growth engine in recent years, a slowdown is hardly welcome news for the global economy. Neither is the prospect of a restive population — a continual worry for Beijing, if it cannot meet the aspirations of a rising middle class. _NYT
Even if China were to slip into recession, it is unlikely that the economic numbers coming out of official Chinese government outlets would reflect the true picture of events. The Chinese people are accustomed to being lied to, and outsiders should expect the same from the Chinese government.

Global commodities markets -- including oil markets -- have been artificially propped up by artificially boosted Chinese demand. But all of this dysfunctional Chinese debt and misallocated capital will eventually have a chilling effect on the Chinese economy.

It is not clear, however, how long one might have to wait to hear a truthful report from the Chinese government.

No comments: