Growth? Slowdown? Watching the data drift while waiting for China's GDP report on Thursday

07/12/2010 3:26 pm EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

All eyes will be on China’s second quarter GDP numbers when they’re announced on Thursday. Will China’s economy show something like the 11.9% growth of the first quarter (Danger, Will Robinson), or a big drop to 8% (Worryingly too slow) or come in just right?

The numbers announced in the run up to the GDP report haven’t given much away.

Exports soared in June, climbing 44% from June 2009. That’s a sign that China isn’t feeling the effects of a slowdown in European economic growth. At least not yet.

Imports grew by 34.1% in June 2010 from June a year earlier. That’s down from the 48.3% growth in imports in May. Imports are an indicator of the growth of China’s domestic economy: if China’s companies and consumers are cutting back, imports will slow. So maybe this is a sign that efforts by China’s government to slow the economy are paying off.

Money supply, as measured by M2, grew by 18.5% in June from a year earlier. In other economies that would be a sign that inflation is on the way and that the economy is growing too fast. But in China the message is much more mixed since that 18.5% growth in the money supply is down from 21% year to year in May and a high of 29.7% in November 2009.

With this kind of non-trend I’d be surprised if many investors placed big bets on the direction of Chinese stocks before the report on Thursday—and maybe not even then.

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