India's growing 3 times faster than China

This can really be the revelation of this decade. Marc Faber, a leading economist and publisher of the Gloom, Boom and Doom report has said that China's economy is growing at 2% and not 7.8% as its government claims. If this is true, then the Indian economy, expected to grow by 6% in the current fiscal, will be outperforming China by 3 to 1 (now this is assuming that the Indian statisticians are not lying as well!).

Interestingly, Faber has also told a leading business channel, "The Chinese government is one of the few governments in the world that knows its GDP numbers three years in advance. I'd be a bit careful about China."

Faber adds, "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 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 that the Chinese markets face headwinds because there's a huge supply of available shares and a record number of new issues, which dampens share-price increases. (China State Construction Engineering Company just launched a US$ 7.3 bn IPO, and the shares listed 56% higher than the offer price...at 40 times 2009 forecasted earnings!)

Faber warns, "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."