In truth, the economy is slowing more markedly than these (highly suspect) official figures suggest. Many economists say that China has an institutionalised bias to over-reporting growth at the bottom of a cycle and under-reporting it at the top, to reduce the volatility of the numbers. Judged by physical indicators, such as electricity consumption or freight volumes, GDP growth probably peaked at over 12% in 2003 and should slow to 8% by 2006. Since China’s macroeconomic growth is driven more by fixed investment than by household consumption (which dominates in the West), it is especially vulnerable to any slowing of corporate investment or public spending on infrastructure.
See also “Brave new yuan world” from Asia Times: “Zhiqun Zhu suggests that the move reflects the growing maturity and self-confidence of the Chinese state. But Huw McKay argues that, while the move may have some political benefits, Beijing has significantly constrained its future options for moving to a more fully liberalized foreign exchange regime.” Also, “Chinese experts react to yuan revaluation move” from Asia Pulse via Asia Times.
