China’s Growth Forecast Lowered By IMF

Nothing coming from China is real.

All economic numbers are totally ‘massaged’ to the upside, whereas power consumption is collapsing.


China’s growth forecast lowered by IMF (Guardian, May 29, 2013):

China needs ‘continued liberalisation and reduced government involvement’ in economy, says deputy IMF managing director David Lipton

China needs to make a “decisive push” to launch new market-oriented reforms and has to control rapid credit growth that could lead to financial problems, the International Monetary Fund said on Wednesday.

The fund trimmed its growth forecast for China this year from 8% to 7.75% because of weaker global demand but said the Chinese economy should remain robust.

The president, Xi Jinping, and other leaders who took power in November have promised to make China’s economy more productive but have yet to disclose details. The World Bank and other advisers say Beijing urgently needs to curb the dominance of state companies and promote free-market competition or growth will decline sharply.

In meetings with visiting IMF officials, Chinese leaders emphasised their desire to nurture “more balanced, inclusive” growth, said David Lipton, a deputy IMF managing director.

“They need continued liberalisation and reduced government involvement [in the economy], allowing a greater role for market forces,” Lipton told reporters.

The government-dominated economy requires “a decisive push to promote rebalancing – rebalancing toward higher household incomes”, he said.

A key hurdle for reformers will be potential resistance within the ruling Communist party to changes that might hurt revenues for politically favoured state companies that dominate industries including banking, telecommunications, shipping and energy.

“Allowing more competition in sectors currently considered strategic would improve economic growth,” said Lipton. He said change would require “strong determination”.

The IMF also stressed the need for Beijing to pay attention to explosive credit growth that has helped to drive its economic rebound.

Private sector analysts estimate “total social financing” – the government’s term for credit from both the state-owned banking industry and informal private sources – rose 58% in the first quarter over a year earlier.

Lipton said the rapid rise in lending increased the risk that some investments might be of poor quality and borrowers might default.

“Growth has become more dependent – perhaps too dependent – on the continued expansion of investment,” Lipton said. “Reining in total social financing and its growth is a priority.”

 

1 thought on “China’s Growth Forecast Lowered By IMF

  1. China has relied far too much on exports, and not enough growth from within. Until 2007, the USA was their #1 customer, we seemed to have unlimited appetite for their goods. Many were of good quality, the silks, the art, much of it was of good quality, and the prices were very reasonable. WalMart built their empire on Chinese goods.
    After the crash of 2007-08, spending habits changed radically in America. Fighting to keep our homes and portfolios, we cut back on unnecessary spending.
    So, China turned to the Euro. At that time, the Euro was booming, much discussion was happening that it might supersede the US dollar, and possibly replace it as the world reserve currency. Electronic currencies were not yet established, and our fool leaders didn’t see the writing on the wall that would make the need for any reserve currency obsolete. There were some electronic financial mediums being built, like PayPal, and others, but they were not recognized as the power they would become.
    By 2010, the Euro was in trouble. It was exposed that Enron accounting was going on in every nation in the Eurozone…….and Europeans know how to cut back in times of financial upheaval.
    That left China in trouble. As the world recession/depression deepened, they found themselves in deep trouble. They relied far too much on the Western economies, and the changes that were coming were more dramatic than we have seen in hundreds of years.
    Even China’s underpaid engineers found themselves without work, and labor riots became a daily occurrence…..in the hundreds. China fought to keep this hidden, but in this information age, it became obvious very soon.
    The entire world economy has made a dramatic shift. All the old rules are gone. China is not nearly as strong as it presented itself, it adopted the worst policies of western economies, including Enron accounting. As a result, millions of their people are outraged and suffering. They are having severe problems keeping the anger under wraps.
    The entire world has looked to China to save the world economy, in fact, they cannot save themselves. An economy that depends so much on exports are weak, regardless of the big numbers they claim every quarter as growth. Like the rest of the world, they are lying.
    We have an economic Armageddon coming, it is now facing us, and it will hurt the entire world economy. The world GDP is supposedly at $50-65 trillion a year. Those numbers are inflated and unsustainable. No matter how much each nation continues to print worthless money, our strength is depleted.
    I don’t know what the final numbers will be, but I estimate they will be less by 33-50%.
    What a mess.

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