Economic growth not yet convincing - Arthur Kroeber

Arthur Kroeber by Fantake via Flickr

China's bean counters have been reporting enthusiastic economic growth of even 8.9 percent in the third quarter, but our own analyst Arthur Kroeber of Dragonomics is not yet convinced,he tellls DNA. "The quality of the growth stinks."

The government looks set to meet and perhaps exceed its 8% growth target for the full year, but "we find it hard to share in the general euphoria about China's economic prospects because the structure of growth stinks," notes Arthur Kroeber, Beijing-based managing director of Dragonomics Research.

In particular, Kroeber points to nominal GDP, which grew by only 4.7% in the first nine months, "which is a bit better than in the first half, but still incredibly slow."

In effect, around 40% of "real growth" is still generated by price declines, and investment accounted for 95% of growth in the first three quarters. "Consumption contribution remains at historically low levels and much of it is coming from the government, not the private sector," says Kroeber.

More at DNA.

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Arthur Kroeber is a speaker at the China Speakers Bureau. When you need him at your conference, do get in touch.

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