China Economy To Overshoot Growth Targets For 2010

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China has just come out with its 2010 economic growth predictions. As expected, they are once again world-beating.

But are they correct?

China Stock Digest subscribers know that we have taken a unique position when it comes to Beijingâ€™s economic predictions. While China critics habitually accuse Beijing of exaggerating its numbers, we say the opposite.

China almost always low balls its numbers. Why? Beijing wisely understands that failing to meet economic projections can be politically risky. So predicting results below real expectations prevents disappointment and usually creates positive surprises. The worst that can happen with a lowball projection is that Beijing hits its public target.

Thatâ€™s whatâ€™s happening this week as the Chinese publish their growth predictions for 2010.

China is targeting 8 percent growth in 2010 partly because of a â€œfragileâ€ global recovery, industry minister Li Yizhong announced a short time ago in an official webcast. China's industrial output is expected to post an impressive 11 percent rise from a year earlier this year, buoyed by the government's stimulus packages, Li added.

Weâ€™re calling this another â€˜under promise/over deliverâ€™ moment from Beijing. In fact we already expect double digit GDP growth for the fourth quarter of this year. So, 2010 is unlikely to be a lot worse unless unforeseen factors intervene.

Momentum and Asian expansion is on Chinaâ€™s side.

As you can see from this IMF projection, China is expected to beat the worldâ€™s leading economies with more than 8% expansion:

* China 9%
* India 6.4%
* Canada 2.1%
* Japan 1.7%
* US 1.5%
* UK 0.9%
* France 0.9%
* Germany 0.3%

In fact, China has officially targeted 8 percent growth every year since 2005 and has yet to come up short. As we said, under-promise and over-deliver!

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