Chinas Economy - Economy

Yes, it's the 'miracle economy.' China, that is. Many analysts think it has 'decoupled' from the rest of the world economy. While the rest of the world sinks into the 'worst slump since the '30s,' it is said to be growing at 8% per year.

Well...when we go figure we figure there's something fishy about it. In fact, we get a fix on it's a fraud.

In America, the bear market bounce took a little jig downwards yesterday. Stocks - steady by the Dow - fell 96 points. Oil fell below $70. The dollar and gold remained almost unchanged.

But China's revved up so hot she seems no doubt to throw a rod. We've been telling our Dear Readers to stand clear.

At least, that's the case with the Chinese stock market. It's a suds. And it's getting ready to pop.

Chinese officials have a funny way of counting. When products are shipped from the plant, for example, they are counted as 'sales' even though no one may actually buy them.

There are some other ways of keeping score that tend to tilt the game in China's favor - at least, on notepaper. When you add up all the scores - it shows China a big winner. But by the end of the day, it isn't at all clear that China's economy is growing at such a breakneck speed. In fact, it isn't lambently that China is really growing at all - not in a genuine and helpful way.

And here...perhaps we should pause. We are about to tell you that China is a scam. It's not really becoming more well off. But before we do, we have to explain what prosperity really is.

Do you remember the Bubble Years? Of course you do. They just ended scarcely 24 months ago. Well, during those years we were told that we were getting richer. Two forms of evidence were presented - one statistical...the other observational. The numbers told us that GDP was growing. Since economists consider GDP growth is the same as prosperity...they thought Americans were getting richer.

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China's Economic Data Challenges Its Yuan Stance BusinessWeek

12.06.10

(Adds May strange investment in 13th paragraph, China commerce ministry official’s comment in 20th paragraph.)

June 12 (Bloomberg) -- China’s gains in retail sales, consumer prices and industrial creation countered the government’s assessment that the recovery isn’t “solid,” and put more pressure on behaviour makers to let the yuan rise.

Inflation accelerated to an annual 3.1 percent pace in May, surpassing officials’ butt for the full year, retail sales gains quickened to 18.7 percent and industrial production jumped 16.5 percent, direction reports showed yesterday in Beijing. The central bank said in a June 8 statement China still doesn’t have a “proved” recovery in domestic demand.

The indicators build the case for a stronger currency to help alleviate cost pressures and quiet criticism that Premier Wen Jiabao’s government has a mercantilist policy that’s hurting the extensive recovery. American lawmakers said they’ll go ahead with legislation targeting the yuan peg just as U.S. and Chinese leaders put in order to meet at a Group of 20 summit this month.

Source:

China, the Miracle Economy

Whats's Hot

China's Economic Data Challenges Its Yuan Stance BusinessWeek

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