Chris Devonshire-Ellis on China’s Economy – Dukascopy Interview

Posted by Reading Time: 3 minutes

Chris Devonshire-Ellis, Founding Partner of Dezan Shira & Associates and publisher of China Briefing, was recently interviewed by Dukascopy, a Swiss foreign exchange bank and market intelligence provider, in their “Expert Commentary” series.

In the interview, Chris discusses the potential for growth in China this year, the current fiscal slowdown, and the differences in GDP growth across China. He also touches on the phenomena of China’s “Ghost Cities,” the Housing Bubble and the Chinese Government’s attempts to control housing prices and reign in credit.

Below is an excerpt from his interview with Dukascopy:

China’s economic growth slowed in the fourth quarter of 2013; however, the nation’s GDP rose 7.7%, which is still a very impressive growth number. Thus, what are your forecasts and expectations on China’s economic performance this year?

The GDP figure of 7.7% is the main national average and everyone is very keen on quoting that, but in reality it means very little. China is a huge country and the main average means that it is adding all the GDP figures together from different provinces and cities.

What China does not do is publish figures that are lower than that average. Conversely, some individual provinces do provide figures that are higher than the average value. That means Western and Central China cities in Sichuan, Xinjiang and Gansu provinces, are announcing GDP growth rates of 12%, 13% or even 14%, which is good and could be expected, because investment into inner cities is increasing both in terms of communication and infrastructure. Thus, one would expect to see higher rates of GDP growth in China’s Inland cities and its Western cities.

However, it also means that if investments in Inland, Western and Central China are higher than 7.7%, then it must mean that GDP growth rate in cities such as Shanghai, Beijing and Guangzhou is actually nowhere near 7.7%.

Actually, I would put Shanghai’s GDP growth rate more around 4-5% mark, possibly also Beijing and Guangzhou. There are indicators that suggest it is probably the case. In case, officials had published these readings, they would have viewed that as a negative play. New York, for example, achieved 4% last year and everyone was happy, so for the Chinese to suggest  Shanghai is doing nearly double that is clearly absurd.

China’s growth rate across the country is erratic, fluctuating and I would suggest that growth on the Eastern sea board is slow, probably, around 4-5% mark, whereas in the central part is far higher than that.

To sum it all up, growth remains sluggish in China’s more developed cities; however, it is expanding at a fast pace in the less developed cities. These provinces are now receiving funding and infrastructure investments to bring them up to the standards of the eastern sea board. Therefore, I would not take too much notice of the main average GDP figures for China, as the question of growth in China is much more complicated than that.

You can read part 1 of the interview here and part 2 of the interview here.

Chris was also recently interviewed by Channel News Asia about Foxconn’s relocation from China to Indonesia and Toyota’s pulling out of Australia. The full interview can be viewed on our ASEAN Briefing website here.

Chris Devonshire-Ellis is the Founding Partner of Dezan Shira & Associates – a specialist foreign direct investment practice providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.

For further details or to contact the firm, please email, visit, or download the company brochure.

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