China's GDP up 8.9 percent and no one knows why
Filed under: Economy
China's GDP rose 8.9 percent in the third quarter and there are plenty of arguments, none of them conclusive, about what caused the rapid improvement.
Clearly one cause, if not the major cause, for the recovery is the Chinese $585 billion stimulus package. For a nation with a $4.2 trillion GDP it represents a fortune spent on developing the country's infrastructure, new building projects, consumer spending and investment. But like all stimulus packages, it is temporary, and some economists worry that it has worked too well, creating bubbles in sectors like real estate and the equity markets. There is speculation that the central government could rein in its contribution in order to prevent inflation.
China may also be getting the unexpected benefit of Western economies that are recovering faster than anticipated. GDP appears to have improved slightly in the U.S. and most of Europe in Q3. If that trend continues, the demand for Chinese goods may pick up. Industrial production was higher by 13.9 percent compared to the same month last year, an indication that demand for manufactured goods may not have been entirely driven by "artificial" stimulation.
There are two ways to look at China's return to rapid growth. One is that the central government has done its stimulus work unusually well. The other is that business demand in the wealthy nations is actually beginning to improve.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
10-22-2009 @ 5:38AM
Paul Theron said...
China's GDP probably $4.2 trillion, not billion
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10-22-2009 @ 6:41AM
STEVE KOREN said...
All of those that hate American worker,Universal health care, and at the same time fly Chinese made American Flag on top of Korean or Japanese made SUV ,learn to use chopsticks because China is going to be (is) SUPERPOWER OF 21 centuryThanks to likes of Madoff ,GREENSPAN ,Poulson AND Mr." Maurice" from AIG.
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10-22-2009 @ 11:58AM
ed said...
That's why O'bummer is in such a quick fast hurry to emulate this communist country. They have a system that "appears" to be working. but if you think about it, they are a government controlled cool aid stand! the suppliers are government controlled and stand is government controlled. There is no freedom and when every thing you buy is government controlled the numbers can be fixed!! wake up you cool aid drinking democrats liberals!
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10-25-2009 @ 3:20PM
Fred Won said...
If you do not know why, as the article title trying to convey, you show talk to plenty of economists who knows why that happened. For example, the economists in Goldman, Morgan Stanley, etc in Asia.
As to "ed" comments, I would say it is exactly this kind of robotic view of "anything China is bad" is hurting our economic prospects. You have to open up your eyes and minds to learn something even from your "enemies". Remember only three hundred years ago America was the "emerging economy", while China was the one of the leading economies for the last 17 centuries before that.
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