Amid growing indications that China’s rapidly expanding public and private debt foreshadows a major economic and financial upheaval in the future, the latest official GDP quarterly data is stimulating divergent views from analysts. According to Beijing, GDP grew by a “better than expected” 7.4 percent in Q1 of 2014. However, this is a further indicator that official growth in China is slowing, as Q4 of 2013 revealed GDP growth of 7.7 percent.
Two things to keep in mind; China’s statistics, as in many other economies, are opaque, perhaps much more so with Beijing. Additionally, the Chinese economy functions with far different dynamics than is the case with a Western advanced economy. Official GDP growth reflects massive infrastructure spending funded by credit expansion, alongside export-based manufacturing growth, with consumer spending a low component of economic activity in comparison with Western countries.
What does seem clear is that the economy’s double digit growth rates of the past are over, the trend in GDP growth is a slowdown, supposedly engineered by Beijing to lay the foundation for more sustainable growth in the future. However, declining GDP growth rates combined with increasing signs of a looming debt crisis add further doubts about the future health of the world’s second largest economy
If Hillary Clinton runs for President of the United States in 2016, see the video about the book that warned back in 2008 what a second Clinton presidency would mean for the USA: