For most Western markets that’s an enviable figure. For
Yet the Chinese government says this is the “new normal”. Gone are the days of double digit growth.
It says 7% is “within a reasonable range” and in line with controlled adjustments designed to slow the economy down to a level of sustainable growth.
Since the global crash of 2008,
Despite a partial recovery globally, trade growth across the world remains well below pre-crash trends. So
The question is whether the declining GDP figures over the past 18 months or so point to a controlled slowdown or hard landing.
“Slower growth should not be viewed as bad news if it means the economy is adjusting to a more sustainable path,” says
“But the adjustment needs support from consumption while the economy adapts to slower investment. It’s sobering that the economy has become so reliant on construction and real estate to generate jobs.”
The property market is a key risk for the Chinese economy. It makes up about 15% of GDP.
Take a look at our recent visit to a Chinese ghost city for a snapshot of the property market in
A breakdown of the first quarter (Q1) figures for this year is revealing too. Industrial output grew at a rate of 5.6%, down from 6.8% in the fourth quarter (Q4) of 2014.
The predicted rate for Q1 was 6.9%, so the actual rate was slower than expected. Factories were shut for some time over
Retail sales in Q1 of 2015 grew 10.2%, with the prediction for 10.9%. The figure in Q4 of 2014 was 11.7%.
Given that the plan is to increase domestic consumption, this isn’t a good trend.
It’s also odd that retail sales would be slow during
A final thought. Can we trust the 7% figure? Could the true figure be different?
His firm’s analysis of Chinese rail freight, electricity production and bank lending, suggests that Chinese growth is running at closer to 3%, not the 7%