Grey rhinos?


A series of official economic indicators – from industrial output to consumer spending – released in the next few days is expected to show the world’s second-biggest economy is on a safe growth track, just months after Beijing warned of “grey rhinos” and “black swans” stalking the country. Among the figures to be released will be growth in fixed-asset investment, measuring Chinese spending on infrastructure and property. Fixed-asset investment rose 7.5 per cent in the first nine months and a Bloomberg survey of economists forecasts that rate to slow to 7.3 per cent for October. It’s a long way from the 20.6 per cent growth reported in 2012, the 23.6 per cent posted in 2011 and the 23.8 per cent recorded in 2010, when the investment was a major driver of gross domestic product. Zhang Yiping, an analyst with China Merchants Securities in Shenzhen, said a growth model relying more on consumption instead of investment meant China’s expansion down the track would be stabler. “China’s investment growth has already dropped to single digits from more than 20 per cent a few years ago, but there have been no big declines in GDP growth,” Zhang said, suggesting that consumption was taking up the slack. Consumption contributed 64.5 per cent of the GDP growth in the first three quarters, while the share generated through investment fell to 32.8 per cent, according to the National Bureau of Statistics. Investment-driven growth is one of the main forces behind China’s rapid build-up in debt which economists point to as a big source of danger for the country’s economy. That debt has been described as a “grey rhino” risk, one that is obvious to all but on which no action is taken.

Oh, it’s debt. And we thought it was some reference to GOPers following the Alabama senate race.

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