China's GDP Shows Strong Growth

The latest evidence of just how strong business in China is right now was word that the first-half growth for the country was understated and that GDP numbers should actually be much better than originally reported. China’s growth has traditionally been stronger than many official estimates, and that was very true this quarter. Of China’s 31 provinces, all but seven of these regions reported GDP growth rates above the National Bureau of Statistic’s GDP estimate of 7.1% for the first six months of 2009. At the start of the year, Beijing’s growth target for this year is 8%, and even that figure could be eclipsed by the revised figures.

I will admit that with the rest of the world looking to China as the economic engine behind the global economic recovery, this discrepancy isn’t sitting well with some investors. The discrepancies between provincial and national GDP estimates is a reminder that statistics can be manipulated for personal and political purposes in China. But that is precisely why the National Bureau of Statistics is often wary of data provided by local governments and tends to revise down preliminary estimates using its own statistical model. Officials in Beijing are fearful of inflating economic figures and shaking investor confidence, so they almost always release numbers lower than estimates to prevent accusations of artificially inflating numbers.

But don’t let this sometimes hazy reporting take away from the fact that China is one of the best places for your money right now. In recent years, provincial figures have suggested consistently the world’s third-largest economy is bigger than China’s published estimate. Overall, it is safe to say that China’s GDP is currently growing at least a 7.1% annual pace, but some provinces are clearly experiencing much faster GDP growth, which is great news for many of my favorite Chinese stocks!

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