Great Graphic: China's GDP and Composition

Here is a Great Graphic from the Wall Street Journal on China's GDP.  Earlier today it reported Q2 GDP expanded by 7.6% from a year ago, which was largely in line with expectations, though it was still the slowest year-over-year pace since early 2009. 

The composition of growth is disappointing.  Even though net exports continued to be a drag, there is little sign that the economy is really evolving to a a more consumption oriented economy.  Consumption actually contributed less to GDP.  The increase in investment is also not necessarily a good thing.  It could be redundant investment that aggravates excess capacity.  Moreover, capital investment appears to have reached a point of diminishing returns.  Every unit of additional investment is not generating the same unit of growth that was previously the case.  

Bottom Line:  China's GDP figure were not horrible, but the economy is still slowing and further monetary stimulus is likely in the coming months.  

Great Graphic: China's GDP and Composition Great Graphic:  China's GDP and Composition Reviewed by Marc Chandler on July 13, 2012 Rating: 5
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