Slower third-quarter growth tells us about next year

CHINA FINANCIAL - Report 25 Oct 2021 by Michael Pettis

Special points to highlight in this issue:

* Chinese third quarter growth came in well below market expectations, but these expectations had always been unrealistically high. The latest data show just how important it is to understand the various components of Chinese growth and the inverse relationship between the two main components of growth.

* Growth this year reflected a one-off partial reversal of last year’s one-off set of post-pandemic conditions. Next year I except growth to be roughly 5.5 percent, and for its composition to look broadly like the pre-pandemic composition of Chinese growth.

* Anyone who believes that China has somehow “turned the corner”, for better or for worse, has probably misunderstood the Chinese growth model.

Now read on...

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