Q4 GDP growth comes in stronger than expected, at 8.9% y/y; 2011 growth was 9.2%
Growth proxies suggest no serious deterioration in activity, though investment is weakening
The property correction is now happening – and it will be deep
Chinas official GDP statistics say the economy grew 8.9% in Q4-2011, and 9.2% for the year – pretty quick. Given widely held expectations of a slower Q4 and general scepticism on Chinas economy, some might wonder whether these numbers are accurate. At times of stress, we know that Chinas GDP numbers can appear a little weird. In late 2008, we recommended a number of growth proxies to watch in case the GDP numbers became less reliable, including electricity production, freight traffic, and production of key industrial goods (On the Ground, 16 December 2008, China – The Rawski Conspiracy, Part III). All of these proxies suggested a deeper downturn in late 2008 and early 2009 than the official GDP numbers showed. In this note, we check in on those proxies, and they suggest that the economy is indeed continuing to expand, albeit at a more moderate pace than in 2011.
We also take a quick look around the property sector. We find that the construction slowdown has clearly begun, and will get deeper. There is still considerable pain ahead.
The December data
Officially, Chinas GDP grew by 8.9% y/y in Q4, better than the market consensus of 8.7%. According to our estimated q/q seasonally adjusted annualised rate (SAAR), growth accelerated to 9.3% in Q4 from 8.5% in Q3, as we show in Chart 1. We cannot square this with the official q/q growth numbers: 2.0% in Q4, down from 2.3% in Q2 and Q3.
