The Wall Street Journal reports China Growth Slows to 6.5%; Finance Officials Try to Soothe Worried Investors.
China’s economic expansion slowed to its weakest pace since the financial crisis, as top financial regulators launched an extraordinary coordinated effort to calm jittery investors.
The rate of growth in the third quarter dropped to 6.5%, falling short of market expectations, official statistics released Friday showed. Growth in industrial output and consumption weakened in the quarter, while exports held up despite the country’s bruising trade fight with the U.S.
Shortly before the data was released, People’s Bank of China Gov. Yi Gang, banking and insurance regulatory chief Guo Shuqing and top securities cop Liu Shiyu all issued statements urging investors to remain calm. Mr. Guo said recent “abnormal fluctuations” in Chinese stock markets don’t reflect the country’s economic fundamentals and “stable financial system.”
Ignore Abnormal Fluctuations
It seems there have been “abnormal fluctuations” since mid-2015. Then again, were the abnormal fluctuations to the upside or lower?
The other remaining issue is whether or not China really has 6.5% growth as reported.
Trifecta in Play
For those interested, I wrote earlier this week that there’s been a clear shift in Beijing’s rhetoric during recent days… quite similar playbook to early 2016 https://t.co/eCA2Lr4J8z
— Christopher Beddor (@chrisbeddor) October 19, 2018
6.5% GDP?
I suggest “take the under”, way under. The State-Owned-Enterprise (SOE) earnings are all a mirage. The tide is going out.
By the way, expect similar action in US equities because they are equally overvalued.
Mike “Mish” Shedlock/
Like other countries, much of China’s growth over the last decade has been constructed upon easy credit and debt. Many people simply do not understand the illusion that has been created as China over-invested and mis-invested following the crisis of 2008. The fact is China will find it impossible to sell people from undeveloped countries that live in a one room dirt floor shanty anywhere near the amount of goods Americans consume.
We must watch the action of the PBOC and what is happening to the Chinese currency in order to understand the impact China is about to exert on markets across the globe. The fact that the PBOC is already scurrying about in an attempt to mitigate damage flowing from the Trump administration is in some ways proof of China’s vulnerabilities. The article below goes into more detail.
Why would ANYONE believe statistics put out by the Chinese government? Are you kidding me, or is it just a joke? Even here in the US everyone knows that 57% of statistics are just made up.
How much of US growth is due to the Trillion dollar deficit and cutting taxes that cause more money to circulate in the economy as long as those 1000 dollar bonuses are getting spent that many companies gave their employees once after Trump lowered taxes…
How much did debt in China increase during that time?
How much did currency in circulation increase during that time?
If those increased say 8% then China’s economy actually contracted -2% and then put all the ghost cities rotting away on top of that and other crazy mal-investments.
China is even worse bubble than USA or EU…
Seems like China is losing the trade war. Not sure what the end result will be since saving face is a big deal in China.