Scary Chinese growth numbers may be turning around

Mark Garrison Jan 18, 2013
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Scary Chinese growth numbers may be turning around

Mark Garrison Jan 18, 2013
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Economic growth figures released today show that China’s GDP growth was up to 7.9 percent during the final three months of 2012.

That would be an earth-shattering number in the U.S. — economists say U.S. GDP growth will be about 1 percent. But in China, it falls short of the double-digit growth numbers that were the norm in recent years.

“Ultimately,”says Chris Low, chief economist at FTN Financial. “I think this is a good development.”

Just a few years ago, says Low, growth in China was anywhere from 10 to 12 percent. But last year, construction in China ground to a halt as China’s GDP slowed to an overall 7.8 percent — the lowest growth China has seen since 1999.

In the context of those numbers, last quarter’s bump reveals that GDP is on the way up again. That’s good news for China, says Low, because “there are hundreds-of-thousands of people graduating college in China every year, and they need to get re-absorbed into the work force.”

And as China transitions to more of a domestic, consumer-based economy, Low says American commodity prices are likely to stabilize as China’s commodity purchases slow.

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