Analysis: China perma-bears scent downbeat economic data ahead

Sun Oct 14, 2012 5:27pm EDT
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By Nick Edwards

BEIJING (Reuters) - China is set to deliver a rare treat to the perma-bears who growl constantly that the growth model that brought three decades of double-digit economic expansion is now broken - data showing that GDP fell below target between June and September.

The first miss since the first quarter of 2009, when the global financial crisis raged, has become the consensus forecast of economists, who expect official data due on Thursday to confirm that growth slowed to 7.4 percent year-on-year in Q3.

That would undershoot the 7.5 percent rate mandated by Beijing for 2012.

There's a risk it is even worse given stuttering steel output, tepid power consumption, sagging exports and steady downward revisions to corporate profit forecasts that have investors in the Shanghai stock market .SSEC set for a third straight year of losses - potentially the worst run in 20 years.

"In reality, GDP growth is probably 6 percent already," MES Advisers' Paul Markowski, a long-time consultant to China's financial authorities, told Reuters.

"China has a trade problem, a consumption issue and a leverage catastrophe waiting to happen," added Markowski, whose sub-consensus view is far from the most bearish.

The trade difficulty is clearest to see in an economy where exports generated 31 percent of GDP in 2011, according to World Bank data, and support an estimated 200 million jobs.

Data released at the weekend showed total trade in the first nine months of 2012 was up 6.2 percent on a year ago, well short of the official 10 percent target, as the debt crisis in Europe - China's biggest export market - persists.   Continued...

An employee makes plastic Christmas trees at the Zhongsheng Christmas Crafts factory in Yiwu, Zhejiang province in this September 13, 2012 file photo. REUTERS/Carlos Barria/Files