China GDP could rattle markets … again
China’s National Bureau of Statistics will release GDP figures for the fourth quarter and full-year of 2015 on January 19 at 10 a.m. Beijing time.
The consensus among economists is for an annual growth rate last year of 6.9 percent, according to The Wall Street Journal. That would be consistent with the Chinese government’s long-term growth predictions, which generally hew closely to official figures released by China’s National Bureau of Statistics.
“The target for last year was around 7 percent,” said Sean Miner, China program manager at the Peterson Institute for International Economics. “So I think they’ll need to be very close to that — 6.7 percent, 6.8 percent, 6.9 percent — in order to project the image that they want.”
China’s Communist leaders, Miner said, are trying to show they can manage an orderly, controlled slow-down from the super-heated growth — in excess of 10 percent annually — of the past few decades.
Cornell University economist Eswar Prasad, who formerly directed the IMF’s China division, is also somewhat skeptical of the precision and reliability of China’s official economic statistics — such as GDP — since they conform so closely to government economic planning.
But, Prasad said that whether China’s growth-rate is actually closer to 6 percent or 8 percent right now, what matters most is the direction and pace of China’s gradual slowdown, along with its transition to a more market-driven, consumer-oriented economy.
And, Prasad pointed out, even with growth in the mid-single digits, China remains a global economic powerhouse and driver of global growth.
“Other than the U.S. economy, there aren’t many spots of strength in the world,” Prasad said. “And China since the financial crisis has been the biggest contributor to global GDP growth. So when it slows, it has a huge effect on the world economy.”
China’s slowdown has helped to drive the prices of crude oil and other commodities sharply downwards, as lower levels of factory output and infrastructure-building have reduced demand for those inputs. And the impact is likely to continue long-term, as China transitions (per the Communist leadership’s plans) from a developing economy driven by public investment in low-tech manufacturing and massive public works projects, toward a developed economy driven by private investment and spending on services and consumer goods.
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