Talking Numbers

3 reasons why China could get worse

Talking Numbers

Economist A. Gary Shilling on three reasons why China is in more trouble than you think.

While the past couple of weeks have been moderately successful for the Chinese stock market, the past two years have not. The Shanghai Composite Index is down more almost 28% since the summer of 2011.

One thing that has the markets concerned is economic growth. Over the weekend, China’s finance minister Lou Jiwei said his country’s growth rate will be 7.5% for 2013. Amazingly, China’s official second quarter GDP growth rate is the same rate.

However, when interviewed a week and a half ago, Minister Lou was reported to have said the rate was 7%, not 7.5%. Shortly thereafter, the government’s Xinhua News Agency revised his comments to read the higher number.

It may seem like it’s quibbling over a rounding error, especially when compared to US official GDP growth rates of 1.8% but, what if this is really a sign of something worse for the world’s second-largest economy?

We talk numbers with economist A. Gary Shilling, president of A. Gary Shilling & Co. Shilling correctly forecasted the US recessions of 1969, the mid-‘70s, and the early 1990s as well as the drop in inflation during the 1980s.

In his interview with Talking Numbers, Shilling says there are three reasons why China may be in more trouble than the world thinks. This will have incredible impact on the global economy, particularly on the United States.

To hear what Shilling has to say about China, watch the video above.

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