Press Release (ePRNews.com) - SEOUL, South Korea - Oct 20, 2016 - In a few days official data will be released regarding the communist nation’s quarterly GDP, but the financial community has been left confused and unnerved by recent conflicting data that has blurred the outlook for the country’s economic growth.
After an encouraging factory output prices report released by the government last week, global markets gained slightly yet consistently. It was the first time factory prices had posted a positive figure in over four years. Conversely, stocks in the U.S. and Europe received a battering after a worse-than-forecast trade report coming from China. It was a mixed bag indeed, and not the kind of information to bolster confidence either way.
International trade was another area that took a surprise slump, both in exports, which dipped 15 percent compared to last year, and imports, which many analysts thought would continue their upswing and resurrect hopes that domestic demand was on the up.
After a decade of GDP boom, China looks to be steadying its economic growth, and last year was the slowest recorded expansion since 1990. Stabilisation has come with massive government spending on infrastructure projects around the country, and credit initiatives to all the biggest banks, but even that hasn’t had the effect that many experts believed it would.
“Although the government has followed through on their pledges to stabilise growth through stimulus spending, the effect has not been to the scale that many analysts projected,” said William Harper, Head of Global Mergers and Acquisitions at CTI China Renaissance on the company’s blog yesterday. “With all that’s happening in the property market, it’s good the government has decided to restrict home purchases. That frenzied activity needed cooling.”
The Bank for International Settlements maintains that Chinese firms are still sitting on nearly $20 trillion in debt, and fixed asset investment is close to 15-year lows. The debt alone is equivalent to 170 percent of GDP, not a healthy ratio.
Most analysts say the GDP figures, when released next Friday, will remain the same as the previous two quarters, around the 6.8 percent expansion mark. A Reuters poll of economists revealed that most think China will hit its economic targets fairly easily, despite a much softer economic landscape. Source :
CTI China Renaissance