… that China GDP grew 7.9% in the 2nd quarter of 2009 vs the previous year, and grew a staggering 16.5% compared to the previous quarter. Car sales rose by 48% and home purchases increased by 80%.   The Economist argues that this is due to both the government’s economic stimulus program as well as belt tightening measures the government put into place the year before:

“In 2007, concerns about overheating prompted the government to curb the flow of credit … This caused China’s economy to slow sharply even before the financial crisis.  Then, last November, the government turned the credit tap back on full.”

I met with the head of a large PC company in China last November and told me he believed China’s domestic market would not suffer as much from the financial crisis due to its government’s efforts.  Apparently he was right.  The government controls the banks and much of the economy and knows how to make their consumers buy (nothing get’s a Chinese consumer to part with their money more than “special” sales, rebates and discounts).

The danger is that they create unsustainable demand, potential bubbles in some segments (e.g. housing), and a repeat of what happened in the US mortgage industry  with too many “bad” loans.

“Did you know …” posts are short factoids or trends related to disruptive leadership (see the list of potential topics in the list of categories to the right.)