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16 July 2009


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China is able to achieve this due to its large state company sector which can be issued with 'administrative' instructions to increase investment, thereby countering any downturn,great lens very interesting article will credit this.


Good Job! Mr. John Ross!
Pettis have not answered any of your question at all! He can not reply to any of your points that you have made other than just dismissed outright! I guess that Pettis is just another Gordon Chang but he is smart to never put a date on his prediction!
I believe that you are Austrian economy school!

Michael Wallace Butterfinger

First, based on historical inaccuracies in Chinese data during economic downturns, the author would do well to take look at the latest numbers with a skeptical eye. Simply proclaiming triumphantly that official GDP figures validate the government's stimulus package is foolish. The gap between Chinese statistics and reality, historically speaking, is always the widest during times such as these. If total new lending during H1 was 7.8 trillion RMB, and corporate deposits went up by more than 5 trillion RMB, where is the real activity that would produce growth figures as high as those reported this week? Second, neither the OECD nor China have yet addressed the structural issues that precipitated the current state of affairs. It would be better in the medium-term, in fact, if the reported growth figures are bogus, because it would mean that China is not adding capacity at a time when global consumer demand us undergoing an adjustment. If China is, as the numbers imply, adding capacity, then the deflationary trends in the manufacturing sector and consumer economies will continue. This implies that a pernicious debt-deflation cycle awaits China's real economy. People are remiss in their need to make snap judgments about the efficacy of China's stimulus measures. Yes, they have boosted short-term growth, but at what long-term cost? Senior Chinese policy makers have been saying for months that the current policy mix will set back reforms in a range of areas, but people like the author appear unwilling to listen. If any economy pumps as much new credit as China has into the real economy, it will produce strong growth. But I, for one simply don't believe the numbers, becauase if they are true, it means that the medium-term cost of short-term measures will be high. This author has no sense of the forest, and has become lost in it by focussing on just a few trees.


I'm not sure you're being fair to Pettis.

He fully accepts that China's policies have led to rapid short term growth, he merely questions the sustainability of it.


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John Ross

  • Is Senior Fellow at Chongyang Institute for Financial Studies, Renmin University of China

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