Michael Pettis of the Carnegie Foundation for International Peace
China’s total economic leverage tends to stabilize
Guan Jinyong, reporter from Hanoi
After the release of the new data, Michael Pettis, a senior researcher at the Carnegie Foundation for International Peace, commented that the results show that China's economy has rebalanced and the overall leverage has stabilized.
Pettis commented that the data released by the National Bureau of Statistics of China showed that China's GDP in the second quarter increased by 1.3% from the previous quarter, which was much higher than the 0.4% growth in the first quarter.
The good news is that there have been some signs of rebalancing in China’s domestic demand in recent months, although China still has a long way to go before it can make up for the serious imbalance that it caused last year.
Pettis believes that the good news is that retail sales growth in May and June of this year exceeded industrial production. Another good news is that the total leverage seems to be stabilizing.
Total social financing increased by 2.3% in the second quarter of this year, while the first quarter increased by 3.5%.
Pettis believes that there is still a fierce debate in China over whether it should be more worried about rising debt or slowing economic growth, and hopes that the party who is more worried about rising debt will win.
He believes that if the local government believes that the economic growth rate is too low, it will lead to a surge in local government infrastructure spending, which will push up the debt level again.
Pettis said that he believes that China's GDP growth rate this year will be between 6% and 8%, which is likely to be close to the midpoint of this range.
Our reporter Guan Jinyong in Hanoi
Our reporter Guan Jinyong in Hanoi