BW: China's Economy - Behind All The Hype

By: TraderMark Monday, October 26, 2009 11:45 AM

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http://www.fundmymutualfund.com/2009/10/bw-chinas-economy-behind-all-hype.html
An interesting story in BusinessWeek in light of some of the comments we've received by some readers on recent entries regarding China - specifically long term competitive threats and lack of innovation. I think these issues in the story are very valid but people have a very short term time frame when viewing them. What is lacking today can change over the course of 1-3 decades; it won't change overnight. There is a reason China demands joint ventures if you want to do business in the country... knowledge.

In case you missed it China reported 8.9% GDP for the 3rd quarter last week but please take whatever is said from any government with many grains of salt. (Aug 5, 2009: China's Provincial Growth Figures Far Overstated versus National Figures) And as we see in the U.S. there will be costs for today's gains.

China's economy grew 8.9% in the third quarter compared with a year earlier as massive government spending continued to lead the nation out of the global economic crisis. Beijing has used a $585-billion stimulus plan and $1.27 trillion in bank lending this year to drive the nation's recovery.
China has seen modest improvements in exports and retail sales, but investment continues to constitute the overwhelming bulk of the country's growth. About 88% of the country's GDP growth in the first half is tied to investment spending.

Via BusinessWeek:

That sense of triumph permeates China these days. The mainland's quick rebound from the worldwide financial meltdown seems to have vindicated its brand of state-led capitalism. As the West struggles to recover, China is on track for 8% growth this year and is about to overtake Japan as the world's No.

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