Why China’s Growth Rate Is Much, Much Lower Than You Think, by Dominique Dwor-Frecaut

China’s economy is not growing at anywhere near the growth rate the Chinese government claims. From Dominique Dwor-Frecaut at zerohedge.com:

Authored by Dominique Dwor-Frecaut, a macro strategist based in Southern California. She has worked on EM and DMs at hedge funds, on the sell side, the NY Fed , the IMF and the World Bank. She publishes the blog Macro Sis that discusses the drivers of macro returns; Courtesy of MacroHive.

China’s True Growth Could Be Half What You Think

China’s GDP data release always generates great market excitement despite rarely straying  more than 25bp below or above the government target. This stability has led a number of analysts to propose their own measures, typically based on a variety of Chinese proxy data but, in the end, not that different from the official numbers. In this article I argue that, based on the performance of countries comparable to China, the latter’s GDP growth could be as low as half the official number and that markets are likely overestimating China’s importance for the global economy. That being said, China has one of the highest levels of corporate debt in the world and slower growth implies greater risks of financial instability.

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