China announced its latest GDP figures; growth was said to be at a rate of 7.5% last quarter. Right after the Chinese announcement came the expected article from Gordon Chang accusing the Chinese of lying about the actual growth rate. Chang says that the actual growth was in the low single digits (like 2 or 3%). So who is correct?
My best guess is that they both are wrong. The Chinese are notorious for publishing figures that make the results look better than they really are. Even so, overstating the growth rate by about 5% is huge even for the Chinese. On the other hand, Gordon Chang is notorious for always bashing the Chinese for overstating their results. He likely overdid this again today.
Don't get me wrong. Chang (who writes mostly in Fortune) clearly has a major amount of information and insight regarding China and its economy. He is correct that things are not so rosy in Asia as the Chinese government wants people to believe. Indeed, in his latest article, he makes the key point that while the new national government may want to restructure the Chinese economy to move from a government investment based model to one based upon consumer purchases, lower officials in provinces and cities are still pushing the economy towards more state investment. This tends to block reform and will slowly strangle Chinese growth.
Right now, it is impossible for a foreign observer to really understand where China is heading. It is a good reason to stand clear of the Chinese economy when investing.
My best guess is that they both are wrong. The Chinese are notorious for publishing figures that make the results look better than they really are. Even so, overstating the growth rate by about 5% is huge even for the Chinese. On the other hand, Gordon Chang is notorious for always bashing the Chinese for overstating their results. He likely overdid this again today.
Don't get me wrong. Chang (who writes mostly in Fortune) clearly has a major amount of information and insight regarding China and its economy. He is correct that things are not so rosy in Asia as the Chinese government wants people to believe. Indeed, in his latest article, he makes the key point that while the new national government may want to restructure the Chinese economy to move from a government investment based model to one based upon consumer purchases, lower officials in provinces and cities are still pushing the economy towards more state investment. This tends to block reform and will slowly strangle Chinese growth.
Right now, it is impossible for a foreign observer to really understand where China is heading. It is a good reason to stand clear of the Chinese economy when investing.
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