Just look at these numbers. I know someone is going to writre and tell me all this is a fantasy, but just let me say it doesn't look like it!
China's economic growth accelerated to 9.1 percent in the third quarter, driven by increased investment as Sony Corp. built factories and China United Telecommunications Corp. expanded its network to meet demand. The rate was higher than the 6.7 percent reported in the second quarter and the 8.7 percent median forecast of five economists surveyed by Bloomberg News. Growth for the full year will probably be about 8.5 percent, the pace achieved in the first nine months, National Bureau of Statistics Deputy Director Qiu Xiaohua, said at a press briefing in Beijing.
China's economy, the sixth largest in the world, is growing more than twice as fast as the five biggest -- the U.S., Japan, Germany, the UK and France. Including Hong Kong, China is now the top export destination for South Korea and Taiwan and one of the three biggest overseas markets for Japan, Thailand and Singapore. "China is really the engine that drives the entire region,'' Ford Motor Co. Chief Executive Officer William Clay Ford Jr. said at a separate briefing in the Chinese capital. ``We do expect to expand aggressively in China.'' Ford, the world's No. 2 carmaker, today said it plans to spend as much as $1.5 billion boosting production at its plant in the city of Chongqing, southwestern China. The company, keen to grab a bigger slice of the world's fastest-growing auto market, said it will add a second factory and an engine-making plant.
Sony, the world's second-biggest consumer electronics maker, said it has invested $8 billion so far in China and predicts the country will become its No. 2 market -- behind the U.S. -- within five years. China Unicom, the nation's No. 2 mobile-phone-service provider, ordered a $139 million code- division-multiple-access network from Nortel Networks Corp. in the third quarter. Fixed-asset investment, which includes foreign direct investment and accounts for about a third of China's economy, rose 31 percent in the first nine months of this year as companies such as Sony invested in new plant and machinery, and the government built roads, bridges and dams. That's helping to create jobs and boost incomes in the world's most populous nation.
The government said 6.25 million jobs were created in the first nine months and the official urban jobless rate at end- September was 4.2 percent. The average disposable income in towns and cities -- home to two-fifths of China's 1.3 billion people -- rose 9 percent to 6,347 yuan ($767) in the first nine months of this year, the statistics bureau said today. Even as incomes climb, Chinese wages are among the lowest in the world. The hourly pay for a Chinese manufacturing worker is 61 cents rather than the $16.14 paid in the U.S., according to a study by economists at the Federal Reserve Bank of Dallas. Cheap labor is helping convince Sony, Siemens AG and other overseas companies to choose China as a hub for their operations. Siemens, the world's biggest engineering company, has invested more than $700 million in the 40 units it has in China. Chief Executive Officer Heinrich von Pierer, in an interview Monday with Der Spiegel magazine, said he could hire 12,000 Chinese software programmers for the cost of 2,000 German ones.
Foreign direct investment into China rose 12 percent to $40.2 billion in the first nine months of this year. This directly accounts for about 5 percent of the nation's gross domestic product and the factories built with these funds produce half China's exports. Overseas sales, which make up about 30 percent of the economy, increased 30 percent in the third quarter and factory production rose 32 percent. Retail sales, which account for more than two-fifths of the economy, rose about a 10th. This strong economic performance may help President George W. Bush argue the case for China to adopt a more flexible exchange rate when he holds talks with his Chinese counterpart, Hu Jintao, at the annual Asia-Pacific Economic Cooperation leaders' summit in Bangkok this weekend. The U.S. says the yuan, pegged to the dollar since 1995, doesn't reflect China's robust fundamentals, giving Chinese exporters an unfair advantage.
Even during the second-quarter outbreak of severe acute respiratory syndrome, a deadly virus that led to a slump in consumer spending, tourism and investment in Asia, China's economy grew more than twice as fast as the U.S. In the first quarter of this year, China posted economic growth of 9.9 percent, it's fastest expansion in seven years. "The economy is back to the trend of strong growth because the central bank has been increasing money supply since the second half of 2002,'' said Yusen Kwoh, chief economist at Millennium Capital Services Co. in Shanghai. Growth of M2, the broadest measure of the money supply, exceeded the bank's 18- percent target for a ninth straight month in September.
Still, economic growth may slow in coming months after the central bank, concerned runaway credit poses a risk to economic growth, in June tightened rules governing lending to the property sector and last month raised banks' reserve requirements, a move it estimated would remove some 150 billion yuan from circulation. A modest slowdown may boost investors' confidence. About three-fifths of 66 chief financial officers employed by companies with operations in China said they are concerned the economy is overheating, with almost a third claiming to have been affected by electricity shortages, according to a poll published Monday by CFO Asia, a monthly magazine. "We have had this year a torrid pace of growth in China,'' said Marc Faber, managing director of Marc Faber Ltd., who manages about $100 million and publishes the monthly newsletter Gloom, Boom & Doom Report. ``The faster an economy is growing, the more likely it is that it will have severe setbacks from time to time.'' China's gross domestic product, the value of the goods and services it produced, rose 8 percent to 10.2 trillion yuan last year. GDP in the first nine months of this year was 7.9 trillion yuan.