Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Trump Stocks and Crypto Mania 2025 Incoming as Bitcoin Breaks Above $100k - 8th Dec 24
Gold Price Multiple Confirmations - Are You Ready? - 8th Dec 24
Gold Price Monster Upleg Lives - 8th Dec 24
Stock & Crypto Markets Going into December 2024 - 2nd Dec 24
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Why Are We Still Paying Attention To Chinese Economic Numbers?

Economics / China Economy Jan 19, 2016 - 11:05 AM GMT

By: John_Rubino

Economics

A few years ago, economist Nouriel Roubini was explaining to a reporter why Chinese economic data couldn’t be trusted. He noted that it takes the US weeks and sometimes months to pull together and process the information necessary to produce a complex stat like GDP, and wondered how China, with its far bigger, less developed (and therefore harder to measure) population was able to do it in considerably less time. He concluded that they’re just making up their numbers.


Since then, a growing number of economists and analysts have come around to this point of view. They now largely dismiss China’s official reports, preferring instead to trust easily-verified things like shipping traffic and electricity consumption.

Yet China’s official releases still get treated by the markets as if they’re based on actual measurement rather than political calculation. The Q4 GDP report, published just minutes ago, is a case in point:

China’s economy grew 6.9 percent in 2015, a 25-year low

China’s economic growth rate slowed to a 25-year low of 6.9 percent in 2015, reigniting worries about the health of the world’s second-largest economy.

China’s economy grew 6.8 percent in the fourth quarter of 2015 from the same period last year, official data showed Tuesday.

Economic growth for the quarter was expected to come in at 6.8 percent on-year, down from the third quarter’s 6.9 percent, according to a Reuters poll, which also found economists expected full-year growth at 6.9 percent, down from 2014’s 7.3 percent.

“This is a good number,” Jahangir Aziz, head of emerging Asia economic research at JPMorgan, told CNBC’s Street Signs. “We’ve known for the last three years that the Chinese authorities are slowing down the economy. This economy is going to slow down,” he said.

“In August, last year there was almost a fear that the economy was in freefall. There was no policy support. I think all that has changed,” Aziz said.

There are a slew of concerns about the Chinese economy as it transitions from a manufacturing base to services: The country is hooked on debt, the shadow banking sector has imploded, the property market sometimes shows signs of a bubble and major industries are slowing.

Those concerns have driven, at least in part, a sharp drop in China’s stock markets recently. The Shanghai Composite has entered “bear within a bear” territory, falling more than 20 percent from its December high, as well as trading down more than 40 percent from its 52-week high set in June of last year.

Now, a couple of things. First, if they more-or-less fabricate their numbers, and this is what they’re willing to admit, then actual growth must be considerably lower. Second, as even the above article concedes, the stock market is tanking and the industrial side of the economy is shrinking. Services — whatever they are — must be rocking to produce a growing economy under those circumstances.

Combine these generally-accepted-as-fake numbers with the Chinese government’s recent display of almost random coercion (prosecuting short sellers, disappearing bookstore owners, imposing capital controls, intervening in equity markets) and a picture emerges of a country that’s not ready for prime time. China is big, yes, but it lacks the rule of law and stable institutions of a world power. And it seems not to understand markets, which should terrify everyone who hopes to avoid a global melt-down.

By John Rubino

dollarcollapse.com

Copyright 2016 © John Rubino - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in