As expected China GDP growth came in a bit weaker, but not much at 6.9%.
We talked about the unreliability of this number in an older post, so I will not linger.
Serious institutional only research houses as Lombard Street, Conference Board Center and capital Economics already in May were giving a correct number between 3.8% and 4.9%.
So the reality is well below.
The bigger issue is a series of conflicting message.
practically as soon as there is a serious hiccup, the trend of reforms and modernization of the economy towards a consumer base economy stalls and the politicians revert to the safe and well trodden path of exports and infrastructure.
Just as one example an anticipated announcement of making State Owned Enterprises more private, has been just reverted and actually the Party announced an increase in control!
There is a lack of coordination and a mixed message as they want to clean up the debt at state level…and everybody knows that the real debt is at regional level.
And so on – they want to sput free stock market, but as soon as the market go in reverse they arrest over 200 people for just talking negatively about the stock market.
The reality is that the “pact” between the Party and the people is Full Employment (as in Western Countries is Democracy) and the Party is scared of a revolutions.
So when the fear goes to panic they revert to what they know.
This fact does not mean China will fall – simply that the problem is much bigger that they (China and Western Media) want us to believe. How much bigger? A lot. Could it cripple China? Probably not, but the longer they do not address the issue the bigger the issue becames.
Well in that they have good company – also the US Federal Reserve the more it dithers unwinding QE 3…the more difficulties they will have.
investorpolitico 