Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • Dick Young’s Safe America
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Dynamic Maximizers®
  • Retirement Compounders®
  • Free Email Signup

Is Chinese Growth Running out of Steam?

November 20, 2017 By Jeremy Jones, CFA

Image used under license from Shutterstock.com

Here Michael Pettis makes the case that China’s growth miracle has run out of steam.

China’s 19th Communist party congress ended last month with an indication that Xi Jinping’s new administration plans to rein in debt by abandoning the country’s long-term economic targets and allowing gross domestic product growth to fall.

Typically, analysts assume that changes in reported GDP reflect movements in living standards and productive capacity. In China, however, this is not the case. Local governments are expected to boost spending by whatever amount is needed to meet the country’s targets, whether or not it is productive.

GDP growth is not the same as economic growth. Consider two factories that cost the same to build and operate. If the first factory produces useful goods, and the second produces unwanted ones that pile up as inventory, only the first boosts the underlying economy. Both factories, however, will increase GDP in exactly the same way….

In China, however, neither mechanism works. Bad debt is not written down and the government is not subject to hard budget constraints. It is the government sector that is mainly responsible for the investment misallocation that characterises so much recent Chinese growth.

Read more here (subscription required).

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • Signs of Trouble in Chinese Economy?
  • More Good News for the Economy
  • Steam Rolled
  • Author
  • Recent Posts
Jeremy Jones, CFA
Jeremy Jones, CFA, CFP® is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. Richard C. Young & Co., Ltd. was ranked #5 in CNBC's 2021 Financial Advisor Top 100. Jeremy is also a contributing editor of youngresearch.com.
Latest posts by Jeremy Jones, CFA (see all)
  • COMMODITY CRUNCH: Will Tesla Buy a Cobalt Mine? - May 17, 2022
  • China’s Economy Taking Hit from Zero-COVID Strategy - May 16, 2022
  • The Clock is TikTok-ing on Legacy Social Media Platforms - May 13, 2022

Search Young Research

Most Popular

  • Don’t Throw Your Bond Portfolio Out the Window
  • You Can Do Better than Mutual Funds and ETFs with Your Cash
  • Will Market Prices Soon Be Meaningful Again?
  • RAGE GAUGE: INVESTOR CARNAGE—Losing Control of Your Money
  • FAANGS Fall Like a Ton of BRICS
  • The Truth About the S&P 500 is Finally Out
  • FRIEND OR FOE: Are You Investing with Time, or Against It?
  • Junk Bond Yields
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
  • The Power of a Compound Interest Table

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Could this Be the Vanguard GNMA Winning Edge?

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

RSS The Latest at Richardcyoung.com

  • DIGITAL DOLLAR DOOMSDAY: The Wall Street Journal Is NOT Going to Tell You This
  • Musk to Break Silicon Valley’s Progressive Conformity?
  • Your Survival Guy: “Sell in May, Buy After Labor Day?”
  • Dick Young: Learn from Hillsdale College Online
  • Ron Paul: “Freedom and Central Banking Are Not Compatible”
  • Biden: A National Disgrace
  • Will the War in Ukraine End Before 2023?
  • No More Big Macs in Moscow? Ever?
  • WATCHING YOU: Italy Deploys Stealth Social Credit System
  • Baby Formula Gone Missing?

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Copyright © 2022 | Terms & Conditions

 

Loading Comments...
 

    loading Cancel
    Post was not sent - check your email addresses!
    Email check failed, please try again
    Sorry, your blog cannot share posts by email.