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Street Talk

Faber: China Really Growing At 2 Percent Thursday, July 30, 2009 11:47 AM By: Julie Crawshaw China's economy is growing at 2 percent, not the 7.8 percent its government claims, says economist Marc Faber, publisher of the Gloom, Boom and Doom report. “The Chinese government is one of the few governments in the world that knows its GDP numbers three years in advance,” Faber told CNBC. “I’d be a bit careful about China.” A growing number of investors turned bullish on China after its markets began to rise last March, Faber notes, adding that it’s possible Chinese markets will continue to rise for a while. “If you throw money at the system, lots of things go up in value — but maybe they go up for the wrong reasons. What disturbs me today … is that the lows in March and late last year, sentiment was incredibly bearish about everything.” Now, Faber observes, “there’s this incredibly bullish sentiment when insiders are actually selling and the technical picture of the market doesn’t look that great.” Faber believes the market faces headwinds because there’s a huge supply of available shares and a record number of new issues, which dampens share-price increases. “My sense is that, near term, we could still have disappointments because now the mood is very optimistic. I don’t think we’ll make new market lows in Asia, but I do think we’ll have a meaningful correction.” On Monday, China’s first initial public offering in nearly a year rose so high and so fast that regulators were forced to halt trading twice, The Washington Post reports. The Hang Seng index rose to double its low point last fall.