GORDON CHANG: Here's Why China's Real Growth Is 0%

gordon chang

Photo: Screenshot via Yahoo! Finance

Chinese GDP grew 7.4 per cent year-over-year in the third quarter, a number that many have cast doubt on. Now famous China bear Gordon Chang has jumped on the band wagon.

In an interview with Yahoo! Finance, he said that GDP growth is actually closer to plus or even negative one, or even flat:

“GDP is probably zero, maybe plus one, maybe negative one. This number is not consistent with the Chinese economy. By far the most reliable indicator of Chinese economic activity is the production of electricity and in the third quarter the average monthly increase in electricity production was 2.1 per cent. And because electricity historically outpaces the growth of GDP, this means China couldn’t have been growing much faster than zero.”

Chang also said part of China’s problem is China’s leadership handover, which has distracted policymakers from the economic problems at hand. 

“Hu Jintao wants to hang around and linger in the limelight and so there’s going to be a period of what the Chinese call two suns in the sky, and maybe even three suns because former leader Jiang Zemin in still there as well.

And what this matters for the economy is that you’re not going to have clear authority and that means that the technocrats who should be running the show are going to have one eye out for the political leadership. And I think that’s part of the problem that they don’t have the political certainty that they really need to have sound economic management.”

Overall, Chang argues that China’s situation is a lot messier than the headlines would suggest.

Watch the entire video at Yahoo! Finance:

SEE ALSO: Jim Rogers Thinks The China Boom Could All Come Apart Over Water >

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