Early this year Chinese Premier Li Keqiang told 3,000 delegates gathered at the Great Hall of the People for the National People’s Congress (NPC):
The downward pressure on China’s economy is intensifying. Deep-seated problems in the country’s economic development are becoming more obvious. The difficulties we are facing this year could be bigger than last year. China’s economic development has entered a new normal.
And with that Premier Li admitted what everyone knew. China was slowing down. Jim O’Neill, a former chairman of Goldman Sachs Asset Management offered his view after a recent visit to China:
The phrase new normal is a clever bit of messaging by China’s leaders, who must explain to the country’s 1.4 billion citizens why the economy will no longer be growing by 10% a year.
The Economist’s opinion page offered concern:
China is faring worse than many had expected. Its deceleration is one of the main reasons for the sell-off of global commodities from iron ore to coal over the past two years. And there are fears it could yet turn uglier.
The Chinese government set the 2015 growth target at 7 percent, down from 2014’s outcome of 7.4 percent in recognition of the fact that investment is slowing and consumption has not matched production for some time. But is it really 7%
Foreign company financial reports are seen as the most reliable source of data from which to judge the true state of China’s economy because as Ann Stevenson from J. Capital Research said:
People are crazy if they believe any government statistics, which, of course, are largely fabricated. I’d be shocked if China is currently growing at a rate above, say, 4%, and any growth at all is coming from financial services, which ultimately depend on sustained growth in the rest of the economy.