Many who are counting on a rapid economic rebound in China to lead the world out of the recession were cheered last week when Beijing announced a 7.9 percent increase in its GDP during the second quarter. The NY Times and Wall Street Journal hailed the announcement as evidence that Beijing has turned the corner, and by implication suggested the rest of the world could be on the road to recovery.

When the economic decline paced by falling exports began last year, China’s government responded with a $500 billion stimulus package that was to be spent quickly on improving infrastructure. Bank lending was increased and large quantities of industrial commodities were imported from abroad.

Some Chinese economists, however, do not see the underlying statistics as indicative of real growth but rather a bubble brought on by loose lending practices. These lending policies are likely to result in much wasteful spending and a big jump in non-performing loans. Exports are down by 25 percent and seem unlikely to increase in the near future while profits of large industrial enterprises are down 23 percent year on year in the first five months.

Average oil consumption in China in 2009 up to April is currently reported to be 6.84 million b/d, versus 6.92 and 7.29 million b/d in respectively 2008 and 2007. While this could increase later in the year, so far it is not suggesting that real economic growth is taking place.