One question that always seems to surround Asian economies is: How much wealth is actually being created?
GDP numbers can be misleading, as they focus on the total dollar value of transactions in the economy. And as you well know, there can be a big discrepancy between top line sales, and bottom line margins. In the US, the focus in the private sector – and what the stock market rewards – is high margins and return on equity (and I’m talking government interference and bailouts aside here – and I realize that’s becoming a very big aside these days).
In Asian countries, the focus seems to be a bit different. In Japan, the goal is full employment. In China, it seems to be top line GDP growth. Just grow baby, and don’t worry about margins – even if they are slim, or perhaps negative!
Stratfor, a strategic intelligence service that you might be familiar with, questions the strength and sustainability of Chinese growth in the short video below: