While Beijing was to release its GDP data today, it’s been postponed indefinitely. Hours before that announcement, China’s top planning agency said growth had “rebounded significantly” and remained “outstanding”. A raft of other economic data was also suddenly and indefinitely postponed. These delays are all you need to know about the current condition of the … Continue reading Beijing Behavior→
Chinese exports are softening, real estate is sinking, the stock market is tanking, the Central Bank is easing policy, and 45 cities with 373 million persons, representing 40% of GDP, are living under full or partial lockdown, up from 23 cities and 193 million people a week ago. Consumer spending is declining and the regime … Continue reading Beijing Battles→
The direct effects of the China-US trade spat on the US are small. It’s secondary effects, like weakening global growth, declining equities, Chinese retaliation, and falling US consumer and business confidence leading to reduced capital investment that’ll hurt. Moreover, the newest potentially tariffed Chinese imports are consumer goods, and US consumer spending drives growth. Collectively, … Continue reading Beijing Battle→
Chinese exports to the US fell 3.5% Y-o-Y in December, while global Chinese exports declined 4.4% Y-o-Y in December. Worse, imports fell 7.6% Y-o-Y in December, suggesting domestic Chinese demand is skidding. In another sign of a Chinese slowdown, the official purchasing managers’ index for Guangdong has suddenly disappeared. Add slowing global growth and that’s … Continue reading Beijing Bargaining→
At present, China’s non-financial debt is 210% of its GDP. When Japan’s economy collapsed in 1992, its ratio was 210%, and when Spain collapsed less than a decade ago, their non-financial debt-to-GDP ratio was 215%. While shrinking the ratio is easy, doing so without slowing economic growth is impossible. Thus, each time China attempts to … Continue reading Beijing Borrowings→
Despite the cost, China continues propping up its overvalued currency. It does this by selling dollars and buying yuan. In this process, the Chinese money supply shrinks, making growth more difficult, China burns through its foreign reserves, which have already shrunk from $4 trillion to $3.22 trillion in 22 just months and exports suffer. Letting … Continue reading Beijing Blooper→
Chinese equity markets are declining because their economy is looking increasingly weak. Worse, the policy of chronically devaluing the yuan, despite a $600 billion trade surplus, has many convinced the government has simply run out of ideas. That, in turn, has led to a growing lack of confidence in the government which is causing capital … Continue reading Bewildering Beijing→
Late last week, the Chinese central bank lowered interest rates for the sixth time in 12 months and reduced the required reserve ratio for the fourth time in a year to prop up its slowing economy. With substantial overcapacity and falling house prices, these actions will, at best, slightly boost investment. What the Chinese economy … Continue reading Beijing Blunder→
With half of Chinese-listed companies having suspended trading, with short selling prohibited, the Chinese Central Bank giving money to firms to buy shares, and the government relaxing rules on mortgage borrowing to encourage stock purchases, it’s clear the Communist Party is panicking. But controlling markets is a fool’s errand, and if equities stay overpriced, these … Continue reading Beijing Booboo→
According to one measure, later this year China will overtake the US as the world’s largest economy, a spot held by the US since 1872. The measure used is purchasing power parity and it’s highly subjective and assumption laden. Worse, Chinese data can’t be trusted. That said, even using exchange rates the US is only … Continue reading Bigger Beijing→