Economists Pricks China’s Growth Balloon
OUR ECONOMIC BUREAU
NEW DELHI, JAN 21: Economists have said exceptionally low inflation rate in China suggests that the growth rate of over 9.5 per cent recorded for the last quarter of the current financial year could well be exaggerated. Most economists maintain that the GDP figures are often exaggerated to attract foreign capital and project itself as a big market.
They also opine that the actual growth rate in China will be around 8 per cent, instead of 9 per cent during the nine months period during the current financial year and over 9.6 per cent during the last quarter of the current financial year.
Icra Ltd economic advisor Saumitra Chaudhuri told FE said the inflation rate in China has been almost nil prior to the October period of the current financial year. “In a growing economy, inflation rates are much higher primarily because there is always a demand supply mismatch, which is created due to the surge in output. This is not the case in China and therefore we are forced to believe that the growth rate is actually lower than what is claimed,” Dr Chaudhuri said.
Also economists say the quarterly growth rate is not a proper barometer to highlight the state of economy. BB Bhattacharya, director, Institute of Economic Growth (IEG) says the quarterly figures are primarily based on production level, while the correct statistics can only emerge when production figures are merged with investment figures. “That apart, hiking the growth rates would attract investors into the country,” he adds.
The Indian Council for Research on International Economic Relations (Icrier), however, states there is little doubt that China is one of the fastest growing economic powers in the world. “From the face of it there is no reason to believe that the growth rate has been lower than what is stated. For example, electricity consumption in the country two years back was significantly low but today it has significantly jumped,” Arvind Virmani, director of Icrier said. He also pointed out that the on the purchase power parity term China is among the first three countries.
financialexpress.com |
