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CRN: Chinese Economy Suffered More Structural Problems

China Review News (CRN) recently published a commentary analyzing the “better than expected” economic numbers from August. In the week of September 9, China officially released statistics on the economy (as of the end of August). On nearly all fronts the Chinese economy showed better than expected numbers. Key indexes such as industrial growth, consumer spending, investments, and international trade all demonstrated higher growth rates. Goldman Sachs, Bank of America, and Merrill Lynch all adjusted their forecasts higher for the third quarter. However the commentary did a deeper analysis and suggested that the two primary drivers of the high growth were banknote based financing and real estate investments. A large number of companies and banks took advantage of operational holes in various types of banknotes to finance short-term cash flow needs. This introduced high risks into to the financial market while boosting the illusion of an actively growing market. The housing market improved recently due to further borrowing into the existing bubble, making the bubble even bigger. The author concluded that the optimistic economic data proves that the structural problems in the economy have only gotten worse.
Source: China Review News, September 13, 2013