Wiggle room: China says economy will grow ‘around’ 7%
Let the hedging begin.
Amid wide skepticism that the Chinese economy will post a 7% growth rate for the third quarter, the National Bureau of Statistics on Friday began the process of giving itself some wiggle room in calling a victory.
Beijing posted 7% growth in the second quarter, and it’s forecast to continue growing at this rate for the third and fourth quarters, and full year.
However, it appears like the Bureau has realized there’s a good chance it may come in under that number and it’s looking for a way to cover itself.
Bureau spokesman Sheng Laiyun on Friday said China’s third-quarter economic growth would not deviate much from the 7% annual pace. He added that changes in the country’s power consumption, rail freight and bank lending are all in line with a 7% growth rate.
“Judging from indicators in July and August, we feel that the economic trend is still stable. There may be some deviation, up or down, but it won’t be big,” he told a briefing, according to Reuters.
Reuters reported Sheng saying, China’s economic growth remains within a “reasonable range” and the government will be able to achieve its annual growth target of “around” 7% this year, despite some downward pressures. Sheng said his “personal view” was that full-year growth between 6.5% and 7.5% would be considered as “around” 7%.”
It’s been a pretty rough summer for all things financial in China. After surging 150% through June, the Chinese stock market crashed, giving up all this year’s gains. And while the stock market isn’t connected to the economy close enough to be a real indicator, it’s still not a good sign.
That’s not to say the world’s second-largest economy hasn’t been showing signs of slowing down. Factory output and investment lost momentum in the third quarter. Adding to concerns, the government allowed the yuan to be devalued last month as a means of stabilizing the stock market and getting the economy moving again,
In fact, the slowdown has been so significant, the US Federal Reserve partly blamed China for why it couldn’t raise interest rates last week. Asia Unhedged thinks the Fed’s talk of a rate hike is one of the things hurting the Chinese economy, so the Fed-speak is circular logic. Still, no matter what the reason, things are downbeat.
The third-quarter gross domestic product data is expected to be released on Oct. 19.