Thursday, October 21, 2010

When 9.6% Growth Isn't Enough

Marketwatch details:

China's economic growth slowed to 9.6% in the third quarter from the same period a year earlier, the National Bureau of Statistics reported Thursday. The result compared to 10.3% growth in the second quarter and was just slightly above a 9.5% average forecast from a survey reported by Dow Jones Newswires. Consumer prices for September rose 3.6% year-on-year, as expected by the Dow Jones survey, ticking up from a 3.5% gain in August. Producer prices were up 4.3%, matching August's increase and coming in above a 4.1% forecast.


Looking at the chart above, we see that this time may be different. Over the past ten years of remarkable Chinese growth there has not been an instance when GDP was trending down and inflation was trending up. Hence, although growing at a strong 9.6% clip, China has a real balancing act to deal with.