China's GDP belies a troubled economy

Chinese economic indicators are cause for concern despite second-quarter growth in line with the government’s 7.5% annual GDP target, The Wall Street Journal reported, citing executives and economists. The economy still has to work through tens of millions of square feet of unoccupied apartment space and hundreds of billions of dollars of unused factory capacity, most of it debt-financed. Despite official instructions to banks to curtail lending to overstretched developers and municipalities, loans are still increasing at rates twice as fast as the economy, and those numbers exclude the shadow banking system estimated at more than US$5 trillion, or 80% of GDP.