In the May 2009 edition of the International Energy Agency's "Oil Market Report", a bit of refreshing skepticism is found with regards to the Chinese Government's reported GDP growth statistics. The story of magnificent Chinese growth has seemingly rendered a large segment of the investment community unable to assess China from a critical standpoint. Our official explanation for this behavior is that it allows stock market bulls to justify US stocks on the theory that demand from China will offset weakness here in the US. After all, how can you argue against the prospect of a billion or so customers just waiting to add to US corporation's bottom lines? Well, the IEA's report does just that, with a special section entitled Another Chinese Riddle: How Reliable Are GDP Figures? The report challenges Beijing's reported Q1 6.1% (year over year) GDP growth. The IEA notes that China's weak oil demand - down 3.5% year over year - in addition to newly released electricity demand figures, are completely inconsistent with the reported level of GDP growth. Throw in the fact that Chinese trade volumes contracted by 20% (Q1 year to year), and a huge question mark starts to emerge.
The fact that the Chinese government would consider misrepresenting it's growth figures should not be a surprise to anyone. The Chinese Government smells Western blood in the water, and has already demonstrated opportunistic tendencies towards increasing it's international profile. Besides, if the United States government is willing to create jobs out of thin air (Birth/Death model), why should we be surprised at similar behavior from an autocratic regime?
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