On China's 8.9% GDP Growth

China Federation of Logistics and Purchasing reports October manufacturing (PMI – purchasing manager’s index) rose to 55.2, a full point increase over September 2009. Chinese manufacturing has risen for the eighth straight month, continuing signs that economic recovery in China is on stable ground.

Further, signs of a more robust expansion follow an already healthy economic recovery, with China reporting 8.9% GDP growth in the third quarter -- the highest rate for any major economy in the world. The China Gross Domestic Product is worth 4.326 Trillion dollars or 6.98% of the world economy, according to the World Bank.

The PMI rise for Octobers data, shows seven of the 11 categories measured in the survey of 700 companies rose. Imports -- which largely contain materials to be processed for exports -- posted a 2.1-point increase, while new orders rose 1.7 points from the previous month.

It also recorded that domestic demand in China was picking up and that the economy was on track to continue expanding. The figures indicate that China's economic growth should accelerate in the next few months.

Developments in the petrochemical industry also received a boost Sunday from the Commerce Ministry by imposed tariffs of up to 35.4% on imports of adipic acid from the United States, European Union and South Korea to stop what the agency claims was the dumping of the chemical at too low a cost on the Chinese market, additional reports by Wall Street Journal News. Adipic acid is an ingredient in nylon and polyurethane and other resins used in manufacturing.

Reliable data on the total value of adipic acid sales to China is unavailable. However, U.S. exports of all organic chemicals to China totaled $2.08 billion in 2008, compared with overall U.S. exports to China of $69.7 billion, according to U.S. government figures.

Additionally, a state-owned China Metallurgical Group (MCC) gets the nod for $3 billion cooper mine in Afghanistan. The project involves mining one of the world's largest unexploited copper reserves, a potential financial boon for an impoverished Afghan country riddled with war.

The promise of a bright future at Aynak, however, cannot conceal the troubling reality of how business is often done in Afghanistan, according to critics of the Kabul government's decision to reject bids from competitors in the U.S., Canada and other countries.

Many complain the bidding process unfairly favored China and epitomized the back-room deals and abuse of power that has turned Afghans against their government and undercut the U.S. military effort there.

Corruption and graft long have been ingrained in Afghanistan's public institutions. Yet the extent of this corrosion has taken on new significance as the White House considers expanding the U.S. commitment to a war unsupported by a growing number of Americans.

However, Tayeb Jawad, Afghanistan's ambassador to the United States, claims the bidding process was above board. Jawad states, he lobbied for the U.S. bidder, Phelps Dodge (PD), to be awarded the Aynak rights, but that China offered to start work right away while Phelps wanted to wait until the country was safer. Other reports show companies such as Newmont Mining (NEM), Agnico-Eagle Mining (AEM), Hecla Mining (HL), and Osisko Mining (OSKFF.PK) showed some interest in the projects as well.

James Yeager, an American geologist who advised Afghanistan's minister of mines, claims a few Afghan officials controlled a secretive selection process that gave the winner, China Metallurgical Group Corp., unwarranted high marks over its foreign competitors.

Some analysts claim China Metallurgical has a poor track record with mining projects in other countries such as neighboring Pakistan, for example, where it operates a copper mine that has yielded little benefit to the local economy.

Disclosure: none

Comments

[Dave Wrixon:]

Well I guess the Chinese aren't having to pay $400 a gallon for gasoline. That would give them a considerable pricing edge.

Nov 02 08:12 AM

[Tony Petroski:]

The chart above say the source is "National Bureau of Statistics."

But what nation?

I happen to know that the reported figure of 8.9% GDP growth for China is not accurate. China actually grew 8.9735%. How's that you Western revanchishts?

Nov 02 09:21 AM

[huangthomas:]

Tony:

Mathematically you are absolutely correct. Culturally you a little off. 8.9 is a "correct" number. "9" is a number revered in Chinese culture. Phonetically, 9 means long, forever..... Chairman died on September 9 (9.9) suggesting he would be remembered, worshipped forever. He returned to Beijing in 1949 triumphantly on September 9. When Chinese central bank raise the interest rate, it is by 0.18, 0.27, 0.36, 0.45%..... (not by 0.25, 0.50, 0.75%...).They are all multiple of 9. In China, culture is more important than mathematics.

Nov 02 11:22 AM

[DrBenway:]

James,

I am wondering if you have any GDP growth numbers from reputable sources (hint: domain name does not end in ".cn").

Seriously, are these reported GDP numbers worth anything since we do not know where Communist propaganda ends and statistics begins? I was in China in April and May this year and most Chinese in street markets, hotels, bars complained how things were slow compared to last year. I stayed in 4.5-star hotel in Shanghai for about $90 a night and it looked half-empty.

Hardly looked like a growth story to me.

Nov 02 10:03 PM