Attention Economy


Monday, October 27, 2014

Obsessing Over China's Short-Term Economic Fluctuations

Reports on China in the Western press these days suggests a certain level of ‘schadenfreude’ (pleasure derived from the misfortunes of others). 

An exception is the following piece by Bloomberg’s William Pesek 
For now, the best strategy for outsiders may be to look the other way, as best they can. Instead of obsessing over every tick up or down in China’s GDP growth rate, the investment world needs to give Chinese leaders time and space to implement the reforms they’ve pledged thus far.
Xi's challenge was clear last week when the global media convulsed over news China had grown the slowest in five years in the third quarter. Editors and bankers tripped over themselves to urge Beijing to do more to spur growth. This is what’s truly hypocritical: Even though everyone acknowledges that China must stop artificially pumping up its economy, markets panic at the slightest hint GDP is losing altitude -- as if China were some giant company that must constantly impress us.”

For those suspicious of China’s GDP figures, see research findings of economists at the Federal Reserve Bank at San Francisco:
On the Reliability of Chinese Output Figures by JOHN FERNALD, ISRAEL MALKIN, AND MARK SPIEGEL