The Dragon's GDP coming in not as high...still relatively good compared to US.

Bloomberg is reporting the latest Gross Domestic Product figures for China.  The figures are below what many expected, pointing to what we've all been talking about.  Basically the growth is slowing. Reading this, the fear is that the government is now going to have to refocus from exports to aid in producing real consumption from the average citizen.  The stimulus plan in place is helping, but it's not enough.

 

April 16 (Bloomberg) -- China’s gross domestic product, battered by collapsing exports, grew at the slowest pace in almost 10 years, probably marking the low point for the world’s third-biggest economy.

GDP expanded 6.1 percent in the first quarter from a year earlier, after a 6.8 percent gain in the previous three months, the statistics bureau said in Beijing today. The figure was below the 6.2 percent median estimate of 13 economists surveyed by Bloomberg News.

Growth in industrial production and investment accelerated, adding to evidence that Premier Wen Jiabao’s 4 trillion yuan ($585 billion) stimulus plan is working. The Shanghai Composite Index fell from an eight-month high amid speculation that Wen will have to do more to increase consumption and wean the economy from a dependence on exports.

- excerpt from "China’s GDP Grows at Slowest Pace in Almost a Decade on Exports", Bloomberg, 2009.

 

I have to say though, I wish we were growing at 6.1% a year. Then again, perhaps everything is relative, or at least that's the excuse these days. Getting back to the concerns raised in the article, it seems that while Beijing is good at promoting export-related prosperity there is questions regarding the other end of things. The Chinese have no real safety net (ironic given it's a country run by a "Communist" party), and are known savers.

“Exports will continue to drag on growth at least until the final quarter of the year,” said Mark Williams, an economist with Capital Economics Ltd. in London. Any recovery this year, will be “lackluster at best.”

The closure of thousands of factories has cost the jobs of millions of migrant workers, raising the risk of social unrest as China approaches the anniversary of the anti-government protests and crackdown in Tiananmen Square in June 1989.

The expansion contrasts with recessions in economies around the world. The Organization for Economic Cooperation and Development predicts 6.3 percent growth for China this year, compared with a 4 percent contraction in the U.S. and a 6.6 percent decline in Japan.

In recent weeks, the price of copper and other materials have begun to go up again. The word on the Street is the Chinese are starting up their buying binge again. Many are calling it as signs of domestic demand. But keep this in mind, they tend to stockpile at various times and then drop out. Also, "domestic demand" has to do more with the push towards more urbanization....i.e. real estate development. My only concern is that the last time the Chinese went on a binge, it was in the late Spring-Summer months leading up to the Olympics when oil skyrocketed to almost $150/bbl.

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1.3 billion people

While they have put some incredibly harsh population controls, China's population pretty much requires them to grow like a weed just to sustain on that large of a population.

Yeah, the Chinese save, we spend, they lend, so they still do not have much of a domestic economy. I don't think their per capita is still very good, i.e. they have a super rich class and then the working poor.

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