SaxoTV

If GDP figures can't be trusted, what's really going on in China?

120 views
China’s latest GDP figures are out and, lo and behold, the one party state’s 7.5% target has been met. Many Western investors have exposure to China, directly or indirectly, so what happens there matters, but if we can’t fully believe the official figures, we need to ask what’s really happening in China?  
 
Pauline Loong, from Asia Analytics, gives us her thoughts and views on the Chinese economy which continues to offer increased opportunities for investors as the country continues on its path of reforms and change.   

If GDP is largely seen as a measure that’s manipulated by the government, tracking the unemployment figures may give a clearer idea of when the Chinese government will step in with fresh stimulus. Pauline says that official figures suggest around ten million people in China are out of work, but that the real figure could be higher. The one number the Chinese government is scared of seeing rise is unemployment. The leadership will do anything to avoid having a restless, out of work population grow too large.

A mini stimulus package announced earlier this year seems to have boosted the Chinese economy, is there more to come? Pauline believes that there will be fresh stimulus this year, with bank reserve and interest rates used as tools to try to improve credit flows especially to small and medium size businesses. A 'big bang' will only be introduced if that unemployment figure reaches what the Party leaders would consider as dangerous.