Can it happen all over again? Is the economy still trapped in the accretion disk waiting to cross the event horizon?
Reuters: China's economy picks up speed in fourth quarter, ends 2020 in solid shape after COVID-19 shock
Gross domestic product grew 2.3% in 2020, official data showed on Monday, making China the only major economy in the world to avoid a contraction last year as many nations struggled to contain the COVID-19 pandemic. And China is expected to continue to power ahead of its peers this year, with GDP set to expand at the fastest pace in a decade at 8.4%, according to a Reuters poll.Sounds good right? Except how did China achieve this "growth?" By pumping sectors such as steel that were the cause of prior slowdowns. They're already talking about cutting support:The world’s second-largest economy has surprised many with the speed of its recovery from the coronavirus jolt, especially as policymakers have also had to navigate tense U.S.-China relations on trade and other fronts.
GDP expanded 6.5% year-on-year in the fourth quarter, data from the National Bureau of Statistics showed, quicker than the 6.1% forecast by economists in a Reuters poll, and followed the third quarter’s solid 4.9% growth.With stimulus measures, pumping value-destroying sectors and behaving as if the virus was gone produced normal levels of GDP growth. Now they will pull back the stimulus. Aside from the spike into 2011 on inflation hysteria and also the extreme move lower in the yen following the 2011 tsunami, copper has tracked with euro/yen. Relationships can always end, but if the economy hasn't exited the post-2008 credit trap, then it looks like inflation trades will be turning lower soon.“The higher-than-expected GDP number indicates that growth has stepped into the expansionary zone, although some sectors remain in recovery,” said Xing Zhaopeng, economist at ANZ in Shanghai.
“Policy exiting will pose counter-cyclical pressures on 2021 growth.”
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