Chinese Professor Censored After Admitting Real GDP Growth Is Below 2%

Stirring up unpleasant echoes of the market chaos that swept the world in the opening days of 2016, Apple's decision to cut its quarterly revenue guidance for the first time in 16 years - citing slowing iPhone sales in China as the primary culprit - reinforced concerns about slowing growth in the world's second-largest economy that could have wide-ranging repercussions for global markets.

This wasn't the only factor prompting fears over slowing Chinese economic growth: a batch of soft economic data including consumption, manufacturing surveys and retail sales indicators has undoubtedly helped contribute to the paranoia. As we argued on Friday, when prognosticating the direction of global markets in 2019, all eyes will be on the USA's largest trading partner.

For the first time since it overtook Japan as the world's second-largest economy back in 2011, China has displayed surprisingly weak economic data that have somehow obscured the widely held, if rarely discussed in public belief that these data, which are compiled by the Chinese state, are largely suspect. Contributing to its goal of maintaining order and stability at home, the Communist Party is widely believed to doctor and goal seek its data to present a rosier picture. Apparently, the notion that this is probably happening has become so widely accepted that investors often lose sight of it.

But in an well-timed reminder, the Financial Times has published a story citing a presentation by a controversial yet widely recognizable Chinese economist and others who argue that China's GDP growth could be much weaker than the official data - which showed the Chinese economy grew at an annualized rate of 6.7% through the third quarter.

To the consternation of Chinese censors, a presentation delivered by an economics professor at Renmin University in Beijing sparked a controversy last month when the professor claimed that a secret government research group had estimated China’s growth in gross domestic product could be as low as 1.67% in 2018, far below the official rate.

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