Having missed yesterday’s vitally important news on Chinese plans to keep its property market under the boot, the AFR this afternoon liberally applies lipstick to the Chinese rebalancing pig by misinterpreting announcements at this morning’s “work report” from outgoing Premier Wen Jaibao:
The Chinese government has said it will continue to aggressively expand infrastructure development as it maintained its economic growth target at 7.5 per cent for 2013.
Delivering his “work report” to the National People’s Congress on Tuesday morning, outgoing Premier Wen Jiabao said fixed asset investment would grow by 18 per cent for the year, broadly in line with last year.
Actually, it’s not “broadly in line” with last year. It’s 10-15% below last year.
I’m not being nit-picking here. This is important because it highlights the problem with China’s growth model. It is the second derivative or rate of change that counts when it comes to investment and GDP. For fixed-asset investment to continue to grow the economy, it’s growth rate must expand every year or its contribution to economic growth is actually shrinking.
In other words, China just materially downgraded its infrastructure investment plans in the name of rebalancing.
The AFR has done its readers no favours who might rightly conclude that they should buy mining shares when in fact they should do the opposite (at least on this data).
Other figures put forth included. from Xinhua:
MAJOR TARGETS FOR 2013
— Gross domestic product (GDP) grows about 7.5 percent.
— Consumer Price Index (CPI) increase will be kept around 3.5 percent.
— A deficit of 1.2 trillion yuan (190.48 billion U.S. dollars) is projected, 400 billion more than the budgeted figure last year and accounting for 2 percent of GDP.
— Add more than 9 million urban jobs.
— Keep the registered urban unemployment rate at or below 4.6 percent.
— The government will work to ensure that real per capita income for urban and rural residents increases in step with economic growth.
FISCAL AND MONETARY POLICIES FOR 2013
— China will continue to implement a proactive fiscal policy. The government will give priority to education, medical and health care, social security and other weak areas that are important to people’s wellbeing.
— China will continue to implement a prudent monetary policy. The target for growth of the broad money supply (M2) is about 13 percent.
Update: In a small victory for MB the article has now changed to:
