1. 1 Chinas Economy and the NPC Albert Keidel Senior Fellow, The Atlantic Council of the United States AKeidel@Keidel.us March 17, 2010 International Economics Program The Carnegie Endowment for International Peace Washington, DC

2. 2 Annual GDP Growth and Inflation, 1980-2009

3. 3 Quarterly GDP Growth, Year-on-Year, 2008-09

4. 4 Quarter-on-Quarter, Seasonally Adjusted

5. 5 PBoCs Seasonal Adjustments Differ Some

6. 6 Even if Quarter-on-Quarter settles at 8% …

7. 7 … headline Year-on-Year growth looks too high.

8. 8 … and PBoC estimates make it look even higher.

9. 9 Quarterly Trade, 2009-2010

10. 10 Monthly Trade and Balances, 2009-2010 Feb.

11. 11 Growth: Domestic & Foreign Demand, 2008-09

12. 12 Quarterly GDP component growth and growth contributions

13. 13 Month-on-month CPI inflation is up … To an annualized 12-percent rate. How bad could this be? Maybe not bad.

14. 14

15. 15 Is the RMB too low? … or too high?! After the euro fell in July, 2008 China decided not to let the RMB depreciate against the US$

16. 16 Foreign Surplus = Foreign Savings In economics -- this identity is always true … … but, which causes which? It is fashionable to say that the savings causes the surplus … but in Chinas case, this is doubtful.

17. 17 Exports – Imports = GDP – Domestic Demand Foreign Surplus = Foreign Savings Does GDP growth push up exports? … … or, does demand for exports pull up GDP? Lets focus on exports and GDP growth …

18. 18 Current Account Imbalances for the U.S., China and Rest of the World

19. 19 U.S. Consumer Credit and Current Account Balance

20. 20 Was this caused by the exchange rate?

21. 21 Where were the Surpluses? China is there too, but came to the party late …

22. 22 The End Thank you AKeidel@keidel.us