Investors and economists are arguing about whether the U.S. economy has any "green shoots" signaling a recovery from the financial crisis, but when it comes to China's economy, there's little debate: Upward revisions to gross domestic product growth projections just keep on coming.
The latest revision comes from Frank Gong, JPMorgan Chase's (JPM) chief China economist, who expects the country's economy to grow 7.8% this year, compared with his previous forecast of 7.2% a few months ago. "The economy is doing a lot better than the market expects," says Gong. "The risk is on the upside." His prognosis for next year is even rosier, with an expectation of 9% growth, compared with his earlier forecast of 8.5%. If the rest of the world pulls out of its slump next year, China could even be looking at double-digit growth again, he says.
Many other economists are sounding bullish about China, where GDP growth bottomed out in the first quarter at 6.1%. Last month the World Bank upped its estimate for Chinese economic growth in 2009 to 7.2%, having forecast in March only 6.5% growth. A few days later the Organization for Economic Cooperation & Development weighed in with a prediction of 7.7%, vs. an earlier figure of 6.3%. Credit Suisse (CS) is calling for 8% growth this year and 9% in 2010.
For the moment, China’s exports continue to contract, although at a slower rate. On July 10, Xinhua News Agency reported a 21.4% decline in exports during June from a year earlier, continuing an eight-month slump. However, exports grew 7.5% from May, and some believe things have turned a corner. JPMorgan’s Gong notes that the export component of China’s Purchasing Managers Index in May was above 50 for the first time in a year, signaling an expansion rather than a contraction in new export orders.
What's surprising and encouraging about the strength of China's recovery is that so much of it seems to be fueled by Chinese consumers. To be sure, the $586 billion economic stimulus package unveiled by the government last November has helped prime the pump, as has a nearly $1.3 trillion expansion in credit since the beginning of the year.
The latest revision comes from Frank Gong, JPMorgan Chase's (JPM) chief China economist, who expects the country's economy to grow 7.8% this year, compared with his previous forecast of 7.2% a few months ago. "The economy is doing a lot better than the market expects," says Gong. "The risk is on the upside." His prognosis for next year is even rosier, with an expectation of 9% growth, compared with his earlier forecast of 8.5%. If the rest of the world pulls out of its slump next year, China could even be looking at double-digit growth again, he says.
Many other economists are sounding bullish about China, where GDP growth bottomed out in the first quarter at 6.1%. Last month the World Bank upped its estimate for Chinese economic growth in 2009 to 7.2%, having forecast in March only 6.5% growth. A few days later the Organization for Economic Cooperation & Development weighed in with a prediction of 7.7%, vs. an earlier figure of 6.3%. Credit Suisse (CS) is calling for 8% growth this year and 9% in 2010.
For the moment, China’s exports continue to contract, although at a slower rate. On July 10, Xinhua News Agency reported a 21.4% decline in exports during June from a year earlier, continuing an eight-month slump. However, exports grew 7.5% from May, and some believe things have turned a corner. JPMorgan’s Gong notes that the export component of China’s Purchasing Managers Index in May was above 50 for the first time in a year, signaling an expansion rather than a contraction in new export orders.
What's surprising and encouraging about the strength of China's recovery is that so much of it seems to be fueled by Chinese consumers. To be sure, the $586 billion economic stimulus package unveiled by the government last November has helped prime the pump, as has a nearly $1.3 trillion expansion in credit since the beginning of the year.
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