HS Dent | The China Bubble

The China Bubble

By Charles Sizemore⋅ February 4, 2010 ⋅ ⋅ Post a comment

Stratfor reported some statistics for China that should be disturbing.

China’s National Bureau of Statistics released on Feb. 2 details about economic growth for 2009, including the components of the year’s 8.7 percent growth rate. Growth is broken down into investment, consumption and net exports. Of these categories, investment contributed 8 percentage points, or 92 percent, of overall growth.

Meanwhile, consumption contributed a comparatively measly 4.6%, while net actually exports subtracted 3.9%. So,virtually all of China’s growth is based on stimulus / investment. Without this capital spending splurge, China’s growth rate would have been a paltry 0.7%.

Given this, it would hardly seem that China would be the engine to pull the world economy out of the doldrums. This is a development we intend to keep an eye on in the months ahead.

Charles Sizemore, CFA

Co-author of the recently-published Boom or Bust: Understanding and Profiting from a Changing Consumer Economy

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Discussion

One comment for “The China Bubble”

Charles,Harry

Can you explain to me how the govt increased the number of job losses in the recession by over 1 million as well as revisimg last 3 mths (Nov-Jan) job losses to a net increase and still the official unemployment and “under employment”
rates dropped. They also said discouraged workers were 1 million in Jan. Correct me if I am wrong but I thought the US already had around 5 million or more discouraged workers at start of recession. Is the drop in these reported rates just because more and more people are “falling of the end” of the what they report?
What is the real number of people out of work + underemployed?

Posted by iktrav | February 5, 2010, 8:20 pm