The Rising Influence of Rising Affluence

[DewDiligence]

China’s 4Q11 GDP +8.9% vs 4Q10 and +8.2% annualized vs 3Q11. (China’s full-year 2011 GDP was +9.2% vs 2010, which was, in turn, +10.2% vs 2009.) Although somewhat lower than the GDP growth in the past few years, the reported 4Q11 growth was considered bullish by investors:

http://online.wsj.com/article/SB10001424052970204555904577165593145006650.html

The data eased fears among investors in Asia that China's growth would suffer a more precipitous decline, sending Shanghai's benchmark stock index up 4.2% in its biggest rise since October 2009, while Hong Kong rose 3.2% in Tuesday trading. Markets in Japan, Australia and India also rose.

Of, course, there’s a bearish side to all this; from the same WSJ article:

The last time the Chinese economy slowed significantly was in the last quarter of 2008 when the world was tumbling into recession. Over the next two years, China responded with a four trillion yuan ($586 billion) stimulus plan that was financed by a surge in lending by state-owned banks. The response helped boost China's growth to 9.2% in 2009 despite the global downturn. But the stimulus also produced a legacy of inflation, a real-estate bubble and a hard-to-quantify level of bad debts. Throughout 2011, Chinese policy makers struggled to contain price increases, and now they are unlikely to unleash a new round of lending that could undo their gains.

What about 2012 and beyond? From the same article:

Forecasts by the Conference Board, the U.S. think tank, see growth in China at 8% year-to-year in 2012, and slowing to an average of 6.6% from 2013 to 2016.

Even 6.6%, of course, is a growth rate that any other large country would envy. The 2012 forecast above is consistent with the one in #msg-70746527.

See #msg-70746353, #msg-70416781, #msg-57188901, and #msg-64946613 for related stories.