The logic is simple – and is based on the classic marketing theory of ‘repeat, repeat, repeat’ any positive message. When an economy of the potential size of China is growing fast from a low base, the statistics should – for several years – always seem impressive, both internally and to a watching global audience. Hence the upward economic curves of the last 15 years have been accompanied by a raft of stellar percentage growth figures.
The global recession has, of course, largely derailed China’s stratospheric figures, although, as analysts frequently point out, such rapid upward growth is a relatively short-term phenomenon anyway. A maturing economy, even one built on the magnitude of China’s vast base of land and population, is not an unstoppable juggernaut. At some point in its growth cycle, it becomes bound by the same national, regional and global checks and balances as an other economy.
Which is a roundabout way of saying that China is now feeling the sustained impact of sluggish economic statistics for the first time in almost a generation – and these must be rigorously analysed by foreign investors in all segments. Not so much a case of ‘buyer beware’ as ‘buyer do your research, then check it again and again.’
Just as stock investors cannot rely on last year’s stellar picks (or its up-and-comers and underperformers) to guide tomorrow’s purchases, so manufacturing investors must now sift very carefully between the mixture of good, bad and rather ugly statistics emerging about China’s economy. Whether you are considering production output, GDP growth, industrial property prices, PMI or retail sales – check back over a period of time, not just recent months, and try to find a reliable analyst to project ahead. Because now is a time for analysis, strategic reassessment and, more than anything else, economic realism.
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on Monday, August 24th, 2009 at 2:52 am and is filed under News commentary.
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From Stellar Statistics To Economic Realism – Part 1
The logic is simple – and is based on the classic marketing theory of ‘repeat, repeat, repeat’ any positive message. When an economy of the potential size of China is growing fast from a low base, the statistics should – for several years – always seem impressive, both internally and to a watching global audience. Hence the upward economic curves of the last 15 years have been accompanied by a raft of stellar percentage growth figures.
The global recession has, of course, largely derailed China’s stratospheric figures, although, as analysts frequently point out, such rapid upward growth is a relatively short-term phenomenon anyway. A maturing economy, even one built on the magnitude of China’s vast base of land and population, is not an unstoppable juggernaut. At some point in its growth cycle, it becomes bound by the same national, regional and global checks and balances as an other economy.
Which is a roundabout way of saying that China is now feeling the sustained impact of sluggish economic statistics for the first time in almost a generation – and these must be rigorously analysed by foreign investors in all segments. Not so much a case of ‘buyer beware’ as ‘buyer do your research, then check it again and again.’
Just as stock investors cannot rely on last year’s stellar picks (or its up-and-comers and underperformers) to guide tomorrow’s purchases, so manufacturing investors must now sift very carefully between the mixture of good, bad and rather ugly statistics emerging about China’s economy. Whether you are considering production output, GDP growth, industrial property prices, PMI or retail sales – check back over a period of time, not just recent months, and try to find a reliable analyst to project ahead. Because now is a time for analysis, strategic reassessment and, more than anything else, economic realism.
This entry was posted on Monday, August 24th, 2009 at 2:52 am and is filed under News commentary. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.