Thursday, July 16, 2009

412. THE MYSTERY OF CHINESE GROWTH

This morning, I was looking at the Nikkei Shimbun (Japan's leading economics daily), and noticed the following graph of China's GDP growth since 2000:This is very interesting if you reflect on it. After all, we are told by many popular peak oilers that:

  1. High oil prices always cause recession.
  2. The current recession was caused by the run-up in oil prices prior to July 2008.

Notice the vertical axis on the graph. Even at its lowest point, the Chinese growth rate never dipped below 6%. China never even came close to a recession, despite the highest real oil prices in history.How is that possible? If cheap oil is so critical to economic functioning, why doesn't an oil crunch stop growth in China?

by JD