Chinese Fire Drill

Roubini calls bullshit on the reports that China's economy grew at 6.8% in 4Q 2008.

The Chinese came out today with their 6.8% estimate of Q4 2008 growth. China publishes its quarterly GDP figure on a year over year basis, differently from the U.S. and most other countries that publish their GDP growth figure on a quarter on quarter annualized seasonally adjusted (SAAR) basis.

When growth is slowing down sharply the Chinese way to measure GDP is highly misleading as quarter on quarter growth may be negative while the year over year figure is positive and high because of the momentum of the previous quarters’ positive growth.

Indeed if one were to convert the 6.8% y-o-y figure in the more standard quarter over quarter annualized figure Chinese growth in Q4 would be close to zero if not negative.

Worse, China's Q1 2009 numbers will be negative. The last real bastion of positive economic growth in the global economy is about to be turned off for 2009, just when the world needs it the most.

2009 will be economic legend, like 1929 or 1945.