Chinese Economics Thread

[antiterror13]

In the last 25 years ... only in 1990 (3.9%) was lower than estimated in 2015 (~6.9%) growth. Note in 1999 the growth was 7.6% and in 2014 7.3%

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[Blitzo]

China suspends mechanism aimed at ending stock market turmoil

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Anybody has any idea what does it mean to suspend the circuit breaker? Does it mean that the authorities will allow a freefall of the stock market without intervening?

I believe so.
Probably a good thing, tbh, considering the stock right now may even be somewhat overvalued when looking at the long term picture.

Anybody has any idea what was the slowest growth rate in the past 25 years?

Like antimatter said, the slowest in the past 25 years was in the the fourth quarter of 1990 when growth was about 3.8%, but I'm not sure what they mean by "slowest in a quarter century," if it means it will match the absolute lowest in a quarter century (which would be 3.8%), or if they mean among the slowest in a quarter century (where a growth rate of 6% or so would also fill the criteria).

Personally I wouldn't pin too much on this lone statement, which has significant room for differing interpretation.

 

[tphuang]

there is nothing wrong with slower growth for China. It's a much larger economy now. It has to transition to a more service and domestic based economy. A lot of weak economies around the world, so it has to adjust to less export dependent. As it's achieving that, it will pollute less over time and maybe Northern Chinese can breathe slightly cleaner air. The big problem is government panicking and trying to inflate bubble and support those polluting industries that have always received abnormal amount of state protection like steel industry and coal industry. Over time, slower growth is not China's biggest concern. Cleaner air, better environment, better food safety and less counterfeiting are basic things that the Chinese government needs to work toward now that the economy is already at the size it is. Of course it will be painful when the economic growth falls, but the growth of past 30 years is not sustainable anymore and you have to somehow transition away from that while not leading to 10% unemployment.

 

[Jura The idiot]

China suspends mechanism aimed at ending stock market turmoil

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...

the five-days chart as of right now:

 

[Quickie]

In the last 25 years ... only in 1990 (3.9%) was lower than estimated in 2015 (~6.9%) growth. Note in 1999 the growth was 7.6% and in 2014 7.3%

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Imo, the last 25 years include the years 1991 to 2015. i.e. 1991 to 2000, 2001 to 2015. So 1990 would be outside of the last 25 years. If 1990 were included, the lowest grow rate in the last 25 years would be said to be 3.9% and not the 2015 growth rate of 6.9%.

I believe so.
Like antimatter said, the slowest in the past 25 years was in the the fourth quarter of 1990 when growth was about 3.8%, but I'm not sure what they mean by "slowest in a quarter century," if it means it will match the absolute lowest in a quarter century (which would be 3.8%), or if they mean among the slowest in a quarter century (where a growth rate of 6% or so would also fill the criteria).

Lol, it too got me confused a bit for a moment. Maybe you got confused with the inclusion of the 1990 figure in the previous post.
Actually there's no ambiguity here.
"Growth in 2015 is expected to be the slowest for a quarter of a century" means that "the grow rate of 2015 is below that of all the years in the last 25 years".
It wouldn't match another slowest growth in the last 25 years because if it's the case, 2015 growth rate would have been reported as being "equal" to the slowest growth rate of the last 25 years.

 

[Brumby]

The next GDP growth rate report is due on the 19th which is just eight days away. We will know soon enough.

 

[Brumby]

the five-days chart as of right now:

I believe the index dipped another 5 % today.

Chart reading 101 is that in a down trend, a rally will attempt to test the break down point and any failure on a test will likely be at that level. If you are planning to short the market that is where you would look to position your short as any rally will likely run out of steam there.

 

[Equation]

"Growth is slower than it had been in the past, but it's still the world's largest market for us. It's still growing."

Enough said. And this is just the car market we're talking about, don't forget the growing Chinese service sectors as well.

The overall Chinese economy may be slowing, but its consumers are in good shape, as evidenced by last year's strong sales for General Motors (NYSE: GM) in the country, GM President Daniel Ammann said Monday.

"Last year, 2015, we posted another year of record sales in China. Our sales [there] last year were up just over 5 percent ... 3.7 million vehicles," he told CNBC's "

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" on the sidelines of the Detroit Auto Show.

Ammann said last year's sales performance underscores that the "real economy" remains in decent shape: "Growth is slower than it had been in the past, but it's still the world's largest market for us. It's still growing."

"The underlying demand seems to be there. Any time you've had an economy as big as China growing as fast as it's been growing, some imbalances will build up in places," he said. "[But] we're getting back to a more maturing kind of growth rate there."

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[Franklin]

The next GDP growth rate report is due on the 19th which is just eight days away. We will know soon enough.

They won't believe anything that comes out of China. They insist that China's growth rate is inflated. See below the article from CNBC. They want to shoot down the Chinese GDP growth numbers days before they come out. But their analysis is flawed for the reasons I posted above. They are looking at the old industries of China and say that its slowing down and then look at consumption saying its not picking up and comes to the conclusion that the economy is growing just 2,4%. But they are not looking at the new industries that are being created and that consumption is more than just buying stuff but its also about services like cinema's, restaurant's, HSR rides etc.

China’s GDP may be much lower than you think

China's economic expansion may be far less than official estimates of 6.8 percent and could be closer to 2.4 percent, according to a new report.

The gross domestic product (GDP) growth of the world's second-largest economy has slowed steadily since 2010, although levels remain far higher than those achieved by most developed and many developing economies.

Last month, China's central bank forecast that GDP would slow to 6.8 percent in 2016 from an estimated in 6.9 percent in 2015. However Fathom, a macro research consultancy based in London claimed in a report that China's economy is only expanding at 2.4 percent per annum.

"We have long questioned the legitimacy of China's official GDP statistics. Pointing to only a mild growth deceleration, we find these impossible to reconcile with a whole host of alternative evidence, not least our own measure of China's economic activity which suggests that growth could be as low as 2.4 percent," Fathom said in the report published Friday entitled "The fantasy and the reality of China's economic rebalancing."

This year, global markets remain alert to any hints that China's economic slowdown might be accelerating. Major U.S. stock indexes lost around six percent or more last week, as these fears helped fuel a rout in global stocks.

International analysts and economists have long suspected that Chinese official GDP figures were inflated. Not many have suggested that annual growth could actually be as low as 2.4 percent, however.

The International Monetary Fund, for instance, estimates that China's economy grew by 6.8 percent in 2015 and forecasts it will expand by 6.3 percent in 2016.

"While there is evidence that the old growth engine, powered by manufacturing, investment and exports, has started to stutter, we find far fewer indicators that point to a pickup in consumption. This is contrary to China's official GDP breakdown, which suggests that activity in the tertiary sector is not only the largest as a share of nominal GDP but also the fastest growing, with annual growth outpacing that of both primary and secondary industries," Fathom said.

The official GDP data reported by Chinese regional government is particularly questionable. In December, China official news agency, Xinhua, reported that economic levels in parts of China's northeastern rust belt were overstated.

One county in Liaoning province posted extra fiscal revenue of 847 million yuan ($129 million) in 2013, 127 percent higher than the real figure, according to media reports.

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there is nothing wrong with slower growth for China. It's a much larger economy now. It has to transition to a more service and domestic based economy. A lot of weak economies around the world, so it has to adjust to less export dependent. As it's achieving that, it will pollute less over time and maybe Northern Chinese can breathe slightly cleaner air. The big problem is government panicking and trying to inflate bubble and support those polluting industries that have always received abnormal amount of state protection like steel industry and coal industry. Over time, slower growth is not China's biggest concern. Cleaner air, better environment, better food safety and less counterfeiting are basic things that the Chinese government needs to work toward now that the economy is already at the size it is. Of course it will be painful when the economic growth falls, but the growth of past 30 years is not sustainable anymore and you have to somehow transition away from that while not leading to 10% unemployment.

Except that I see a massive economic and financial crisis coming for the world this year that could be bigger than the one of 2008. And they wan't to blame China for it.

 

[Blitzo]

They won't believe anything that comes out of China. They insist that China's growth rate is inflated. See below the article from CNBC. They want to shoot down the Chinese GDP growth numbers days before they come out. But their analysis is flawed for the reasons I posted above. They are looking at the old industries of China and say that its slowing down and then look at consumption saying its not picking up and comes to the conclusion that the economy is growing just 2,4%. But they are not looking at the new industries that are being created and that consumption is more than just buying stuff but its also about services like cinema's, restaurant's, HSR rides etc.

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Except that I see a massive economic and financial crisis coming for the world this year that could be bigger than the one of 2008. And they wan't to blame China for it.

Yes, one thing I've noticed in the last few months is that it has suddenly been much more accepted in mainstream media to accuse China of outright making up its economic numbers, and with more financial institutions suggesting it as well.

One real potential danger of this, is that markets may end up reacting negative to any Chinese economic numbers, if it becomes commonplace for everyone to believe that all Chinese economic numbers are made up, regardless of what the actual truth is.

I'm not entirely sure how these various financial institutions end up at their own GDP calculations nor do I know how China reaches its own either, so I think it is hard to say whether all parties are looking too close or not closely enough at old or new sectors.


I suppose one good thing about the "China is lying about its GDP growth" crowd is that this challenge cannot be left unmet for too long, because there will bound to be other financial players who believe China's growth rate actually is about what China says it is, and that it may cause the various financial players to more publicly compare notes about how they calculate GDP.
Furthermore, we will also know in a few years just who is making the mistake and/or lying -- the big difference in GDP growth rates that China is publishing and forecasting versus what some financial institutions are suggesting, means that we'll be able to see more firm economic indicators emerge in a few years, which will tell us just who may have been right.

It's also important to note that as of late last year, economic growth predictions for China from other financial institutions and some big institutions were still predicting growth in line with China's own.
from CKGSB's winter 2015 magazine: