Sentiment has changed swiftly regarding China. Not long ago, many economists and investors were worried about a hard landing in the world’s second biggest economy. But now optimism toward China has been renewed after some positive economic figures showed that the country’s economy seems to be stabilizing.
Foremost among these numbers was the third quarter GDP number which showed China’s growth rate at 7.4%, which was roughly in line with expectations. Other recent data for September, including exports, fixed asset investment, industrial output, and retail sales, came in better than forecast. This has led some economists, such as Dariusz Kowalczyk at Credit Agricole, to state that “the [Chinese] economy has turned the corner and is on its way up.”
The reason for optimism goes beyond just the recent economic data. Another key factor is the upcoming leadership transition at the 18th National Congress of the Chinese Communist Party in November. This once-in-a-decade leadership transition is expected to result in additional stimulus for the economy (infrastructure spending, retail sales incentives) by the government.
Of course, not everyone is convinced that what ails the Chinese economy has gone away. Some economists point to weak economic numbers such as the country’s electricity consumption. Normally a good indicator of economic activity in the country, it has been hovering around zero growth for most of the year.
Other good news is that Chinese investors believe that their economy is bouncing back. The benchmark Shanghai Composite has been a laggard among the world’s stock markets for a few years now, but it is coming back to life. It has risen 4% just since the beginning of September. That index may be a key indicator for investors to watch and help them judge whether the Chinese economy has truly turned the corner.
About QualityStocks
QualityStocks is committed to connecting subscribers with companies that have huge potential to succeed in the short and long-term future. We offer several ways for investors to learn more about investing in these companies as well as find and evaluate them.
Sign up for “The QualityStocks Daily Newsletter” at www.QualityStocks.net
The QualityStocks Daily Blog http://blog.qualitystocks.net
The QualityStocks Video Charts http://videocharts.qualitystocks.net
Please see disclaimer on the QualityStocks website: http://disclaimer.qualitystocks.net
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment