A Tentative Analysis of Current Situation of China Economy
...s on the allegation made by some domestic and overseas analysts that the economy is overheated. Traditionally, four aspects of facts are examined when evaluating whether an economy is overheated or not. Firstly, whether the GDP growth rate is apparently higher than the potential capacity of economic growth. Secondly, whether there is an obvious increase of the price level. Thirdly, whether the supply of such basic commodities as steel, fuel, and other factors of production become a bottle-necks of sustaining the economic growth. Finally, whether bubbles can be observed in certain field of the economy. 1, GDP growth rate VS Potential capacity of economic growth Historically, as estimated by the Development Research Center of the State Council, the potential capacity of economic growth of China is averaged at 9.5% in the past 12 years. The current GDP growth rate, as reported by the National Bureau of Statistics, is 8.5%, which, in our opinion, is somewhat under estimated. The reason lies in the unexplainable discrepancies between GDP growth rate of 8.5% and other relative growth rates, such as growth rate of industry output value added?§§¡í¡è§´¦Ì§¶§è?§µ§¸¦Ì?? that is 16.8%, growth rate of electricity supply that is 15.6%, and growth rate of Tax that is 21.7%. The actual growth rate of GDP is accordingly estimated to be 9.9~11%, which is higher than the potential capacity of economic growth. 2, Price Level and CPI value In November, the national resident consumption price level was up by 3% over ...