Skip to main content

An investor looks at the stock price monitor at a private securities company last month in Shanghai.

Associated Press

When markets move, people want reasons – and the reason floating around on Thursday in response to the day's strong stock market gains is that China's economic growth in the first quarter will be much better than expected.

According to reports in the Wall Street Journal and Reuters, traders are hearing that the so-called "whisper" number for China's gross domestic product will be 9 per cent, on an annualized basis. That's way above calls from economists for growth of 8.4 per cent. We'll find out soon enough: China will release the number in the evening.

Curiously, this upbeat whisper number follows a more downbeat expectation from the World Bank. In its latest quarterly update, it now expects China's economy to grow by 8.2 per cent in 2012, down from an earlier expectation for growth of 8.4 per cent. The good news here is that the World Bank sees an economic soft-landing here; the bad news is that they don't seem to be in the 9 per cent camp, at least for the full year.

Story continues below advertisement

"China's gradual slowdown is expected to continue into 2012, as consumption growth slows somewhat, investment growth decelerates more pronouncedly and external demand remains weak," said Ardo Hansson, lead economist for China, in a release. "The risks of overheating are moderating, increasing the prospects to achieve a soft landing."

If stocks are indeed rallying on the expectation that this view of relatively tepid growth is wrong (at least in the first quarter), then investors must be embracing the belief that China's economy will either power the global economy upward or at least reflect a stronger global economy. In afternoon trading, the S&P 500 was up more than 17 points, or 1.3 per cent.

And the gains follow disappointing U.S. initial jobless claims, which rose to 380,000 last week and seem to back up the disappointing monthly payrolls report released last week by the Labor Department.

Report an error
About the Author
Investing Reporter

David Berman has been writing about business and investing since 1995. He has written for a number of magazines, including Canadian Business and MoneySense. He worked at the Financial Post as an investing writer and daily columnist before moving to the Globe and Mail in 2008. More

Comments are closed

We have closed comments on this story for legal reasons. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.