Salient to Investors:
William Pesek writes:
The best way to approach China’s GDP figures is ignore them – they are much worse than they appear.
Industrial production rose just 8.9 percent in June versus 9.2 percent in May, anemic for an export-addicted, developing economy, and will crimp consumption and income growth in half2 2013.
Obsession with GDP numbers that tell us very little is unhealthy. China’s output is certainly lower than any of these numbers.
Even in the best of times, China’s data is as accurate as tossing a dart at a chart on the wall. China is a structurally imbalanced economy distorted by top-down policies and considerable gray activities’ that are hard to measure. With modest resources, China need to condense and capture the activities of 1.4 billion people at many levels of poverty, prosperity and urbanization.
Michael Pettis at Peking University said analysts assume China can start with a clean state and grow at a slower but healthier rate once it corrects its mistakes, but simply ignore all the piled up debt.
Sliding Chinese growth is dismal news for Japan’s drive to end Japan’s deflation and is painful for the US to see the world’s only major growth engine sputter.
Read the full article at http://www.bloomberg.com/news/2013-07-15/don-t-get-distracted-by-china-s-gdp-data.html
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