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China’s GDP Beats Expectations But Retail Sales Are Weak Again

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27 comments on China’s GDP Beats Expectations But Retail Sales Are Weak Again

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Michael Pettis discusses China’s beat-the-street numbers. They are not all that rosy.

Beat the Street 

Retail Sales Weak

Retail sales were up 3.5% during the quarter, and while this was better than the horrible Q2 performance (down 4.6%), it was slightly below already-weak expectations. For the first nine months of the year retail sales were up a very low 0.7%

Consumption Gap Widens

This meant that the gap between industrial output and consumption (for which retail sales are a proxy) continued to widen in the third quarter, albeit at a slower pace. At this rate the consumption share of GDP will have dropped this year by 1.7 percentage points.

Trade Surplus Soars

China’s trade surplus for the first nine months of 2022 was 49% larger than it was over the same period last year, which was itself a record trade surplus.

Is Everyone an Exporter?

This is quite interesting. 

  1. China’s Trade Surplus is 49% better than  the previous record set last year
  2. GDPNow estimates in the US soared on exports and shrinking trade deficit 

For discussion, please see GDPNow Creator Pat Higgins On the October Surge in the GDP Forecast

GDPNow data from the Atlanta Fed, chart by Mish

Spotlight on Current Real Final Sales (RFS) Estimate – October 14

  • Base GDP Estimate: 2.8 Percent (Above Chart)
  • RFS Total: 2.9 Percent (Above Chart)
  • RFS Domestic: +0.6 Percent (Report Details)
  • RFS Private Domestic: +0.2 Percent (Report Details)

Real Final Sales to private domestic consumers is a barely positive 0.2 percent.

Government spending tacks on another 0.4 percentage points.

All the rest is net exports.

Factoring in Inflation, Retail Sales Remain Very Weak in September

Please recall Factoring in Inflation, Retail Sales Remain Very Weak in September

Real sales (that’s what matters to GDP) were down 5 of the last 7 months in the US.

GDPNow and China GDP are both surging balance of trade reasons. Both the US and China have weak retail sales.

Who’s buying all these Chinese exports? Europe? My dead grandmother?

Is this Chinese GDP estimate a complete fabrication? What about the GDPNow model?

This post originated at MishTalk.Com

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27 Comments
Newest
Oldest Most Voted
HippyDippy
HippyDippy
3 years ago
I wasn’t aware that anyone believed the Chinese economic reports. Personally, I haven’t believed ours since Dubya was in charge of screwing up the economy.
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GodfreeRoberts
GodfreeRoberts
3 years ago
China’s GDP topped expectations but retail sales are weak and it’s full-year GDP target is questionable.
Not you, Mish!
Adding downer subheads to all positive China news?
You’re better than that, Mish. So much better.
Better still you do not work for Mike Bloomberg, or the NYT.
As a self-employed American citizen you’re free to tell us useful, truthful stuff about China, especially since it’s the world’s #1 destination for investment:
After three years of Covid, 90% of Americans and Chinese have not been locked down, and
US GDP has grown 3.4%, with 1,000,000 Covid deaths and 3,000,000 Long Covid invalids
China’s GDP has grown 13.8%, with 7,000 deaths and 38,000 Long Covids.
News we can use..
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StukiMoi
StukiMoi
3 years ago
Reply to  GodfreeRoberts
Those final stats do illustrate an important point. Mainly about who is being locked down; as well as the effect of doing so.
Most Chinese have not been locked down. But the ones who have, are disproportionately from the big, coastal, chattering class cities; which is where expats, media people etc., are most likely to hail from, hence be focused on.
But conversely: Value is mostly added in the vast hinterland. With the coast(s) increasingly serving as little more than storefronts populated by dolled up mannequins looking good while doing nothing. The hinterland is where the once recognized “quiet men” ply their trades. Where the nuts and bolts of industry is located. Where said “quiet men” have little choice but to produce something of value if they want a salary. While OTOH; economically, you could lock down New York and DC indefinitely; and it wold, at the very most, result in a great big nothing as far as economic performance is concerned. But lock down the Bakken, or the Bering fisheries, or the Mississippi; and America would hurt….
But in our fully financialized dysfunctional dystopia; it is of course the concerns of the screeching coastal irrelevants which are being paid attention to and listened to. After all, they are the ones The Fed has robbed all the rest on behalf of. Hence they are the onoy ones who can afford bullhorns and media outlets. While China isn’t exactly free of idiotic “investment property” rackets either, nor CCP influence peddling; it’s at least a bit comforting that the CCP, for all its evils, seems to be slightly less out of touch with economic realities, than our homegrown clowns are.
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HippyDippy
HippyDippy
3 years ago
Reply to  StukiMoi
The idiocy here might be attributed, in part, to the Chinese owning so many of our officials. Seems everyone but the people they’re supposed to represent get represented by them.
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MPO45
MPO45
3 years ago
The way to get the real China GDP is to measure Apple iphone sales in Asia year over year or q over q for changes. Its the best extrapolation possible given that stats out of China are always suspect.
In profit news, LVS tanked just as expected and I closed my puts with a nice 15% profit, may tank more but can’t get too greedy.
Also did buy/write on Canadian oil companies today, seems they are priced too low and premiums too juicy.
Lastly, XOM and BP have still have huge and unusual call buying. Mega bets happening that these stocks will be way way higher in January and beyond. I got called out of XOM on my covered calls Friday but still long BP. Let’s hope BP flies to the moon in January!
Only a few more trading days left before JPOW kicks the market in the nuts. Position and profit accordingly.
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TexasTim65
TexasTim65
3 years ago
Reply to  MPO45
Not sure iPhone sales do a good job of Chinese GDP given that the Chinese are moving away from Apple.
Looking at their energy consumption is probably a much better indicator of how their economy is going.
Notice the peaks and valleys over the last 2 years that coincide with lockdowns and recoveries etc.
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MarkraD
MarkraD
3 years ago
Reply to  TexasTim65
“…the Chinese are moving away from Apple….”
Excellent point, I was in Asia last month (not China though), there are Hua wei billboards everywhere and I’m sure the Chinese gov is doing all it can to push sales for it’s own producer in the aftermath of the ban.
I wouldn’t use a discretionary product that has competitors in a fickle sector like that to gauge the health of an economy.
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MPO45
MPO45
3 years ago
Reply to  TexasTim65
I use iphone sales for the high end/luxury market and P&G for the low end. The apple 10Q is out later this week. From the P&G 10Q:
Net Sales
On a regional basis, volume decreased high single digits in Europe and decreased low single digits in North America and Greater China. These volume decreases were partially offset by a high single-digit increase in Latin America and low single-digit increases in Asia Pacific and IMEA.
Hair Care net sales decreased low single digits. Negative impacts of a decrease in unit volume and unfavorable foreign exchange were partially offset by higher pricing (in all regions). The volume decrease was driven primarily by declines in Europe (due to portfolio reduction in Russia), Greater China (related to market contraction) and North America (due to market contraction and increased pricing).
Skin and Personal Care net sales increased low single digits. Positive impacts of a volume increase, higher pricing and a benefit from acquisitions were partially offset by unfavorable foreign exchange and unfavorable mix (due to the decline of SK-II brand, which has higher than category-average selling prices). Volume increase was primarily driven by growth in North America (due to innovation) and Latin America, partially offset by a decline in Greater China (due to pandemic-related lockdowns) and Asia Pacific. Organic sales increased mid-single digits as a mid-teens increase in North America
Oral Care net sales decreased low single digits. Negative impacts of a volume decline and unfavorable foreign exchange were partially offset by increased pricing and favorable product mix (driven by the growth of power brush and premium paste products, both of which have higher than category-average selling prices). Volume decline was primarily driven by North America (due to market contraction and increased pricing), Europe (due to portfolio reduction in Russia and increased pricing), Greater China (due to market contraction) and IMEA, partially offset by growth in Latin America.
This tells me half of what I need to know about China. The other half comes later this week.
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KidHorn
KidHorn
3 years ago
Chinese numbers are goal seeked. Nothing new. What I’m far more interested in is what’s going to happen with all those residential units already paid for that will never be built.
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StukiMoi
StukiMoi
3 years ago
“Is this Chinese GDP estimate a complete fabrication? What about the GDPNow model?”
Since neither have any more relevance than the Peanut ratio (how many times someone uttered the world Peanut, divided by something similarly irrelevant to anything meaningful), who cares if they are fabricated or not?
POTENTIAL economic activity is a measure for something meaningful: Wealth. And, in a free society, actual activity will, over a long enough time horizon, somewhat track potential activity. But in societies as economically unfree as both the US and China, where so much of “activity” are solely the result of “policy”: Short term measured “activity”, even if it could be measured reliably and without controversy, is little more than a measure of the pumping and “supporting” of malivestment for political feelgood reasons. As in: All you’re “measuring” are the numbers of windows you are breaking in order to generate measured activity by fixing them.
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Maximus_Minimus
Maximus_Minimus
3 years ago
Reply to  StukiMoi
When it’s Chinese data, it’s fabrication.
When US data, it’s statistical model error.
Both are manipulated at the source.
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RonJ
RonJ
3 years ago
Zero Hedge headline: “US PMIs Plunge Into ‘Contraction’ In Early October, New Orders Weakest Since COVID Lockdowns”
There is the correct context. “Since Covid lockdowns.” The pandemic didn’t crash the economy, the government lockdowns did. Now we have this economic whipsaw from massive monetary and fiscal expansion and now the reaction to rapid inflation caused by it.
What a huge mess, for no good reason at all. And if one puts their critical thinking cap on, it looks as if this virus was man made. If so, this entire mess is a man made disaster, not a result of an act of nature.
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MarkraD
MarkraD
3 years ago
Reply to  RonJ
Uh oh, America needs to stop helping Ukraine, or Zerohedge’s gonna convince us our economy’s screwed!
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RonJ
RonJ
3 years ago
Reply to  MarkraD
What do Covid lockdowns crashing the world economy in the aftermath of what is likely a man made virus, and bringing us to 9% inflation we have now, have to do with Ukraine? The economy is screwed. Dr. Birx wanted the U.S. economy shut down and she got her way.
I don’t need Zero Hedge to convince me. All i have to do is look at the data.
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MarkraD
MarkraD
3 years ago
Reply to  RonJ
Ron, none of that’s some kinda secret, both Fed and Government went overboard in 2020, I remember Trump pressuring the Fed to get rates down while at the same time slathering anyone with a pulse in free money.
Zerohedge is garbage, they’re citing the obvious, and I really wish China would take it’s finger off the shut down trigger every time someone cough’s.
China and Ukraine have created supply problems that have fed inflation, no secret there, and yes, the Fed’s got a tough row to hoe …Zerohedge just loves to make any possible sign of problem and turn it into a crisis for the U.S. economy.
They’ve successfully predicted 50 of the last 2 downturns.
.
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xbizo
xbizo
3 years ago
Alcoa’s Q3 revenue off 8% from Q3 2021. EBITDA fell from$728MM to $210MM as it was pinched by lower revenues and higher costs. With a 23% drop in stock price from last year, is this steep fall in cash flow priced in?
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RonJ
RonJ
3 years ago
Obstructing retail sales of Fluvoxamine.
“Previously, 100 mg of fluvoxamine twice a day was shown to be effective. We have mechanistic evidence that fluvoxamine
(SSRI-Selective serotonin reuptake inhibitor) works as it is a mast cell stabilizer. The NIH/ACTIV-6 trial used only 50 mg twice a day.
The ACTIV-6 study was designed to fail and produce headlines such as Study Debunks Use of Antidepressant Luvox as COVID Treatment.”
Another rigged trial. Active-6 did the same to Ivermectin. How many people died as a result of corrupt public health agencies?
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MarkraD
MarkraD
3 years ago
Reply to  RonJ
Oh yes, I can see how this relates to Chinese GDP & retail sales.
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Doug78
Doug78
3 years ago
Reply to  MarkraD
Totally.
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RonJ
RonJ
3 years ago
Reply to  MarkraD
Where is Fluvoxamine manufactured? Drugs are not produced in the U.S. Apparently China and India are where things get made these days.
How many products from China do dead American Covid patients buy?
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Doug78
Doug78
3 years ago
Reply to  RonJ
That has nothing to do with why Chinese exports surged 49%.
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RonJ
RonJ
3 years ago
Reply to  Doug78
well, yes it does, because if Covid treating drugs had not been obstructed, there wouldn’t be a 49% surge in Chinese exports.
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Doug78
Doug78
3 years ago
Reply to  RonJ
That is an extremely tenuous lien.
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MarkraD
MarkraD
3 years ago
Reply to  Doug78
That’s an understatement.
Deriving meaning from loosely arranged pseudo-facts to conclude a trading strategy, I’d be broke listening to him.
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RonJ
RonJ
3 years ago
Reply to  MarkraD
Safe and effective was never a fact. Dr. Birx said in her book, that she knew before the shots were rolled out, that they didn’t work. The public now knows that they don’t. The sheer number of VAERS reports. which doesn’t account for the under reporting factor, speaks to the fact that they are not safe.
You claim pseudo-facts, but don’t refute with any actual evidence. Actual data shows that the officially sanctioned HCQ, IVM, Fluvoxamine trials, were rigged to fail.
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RonJ
RonJ
3 years ago
Reply to  Doug78
Nothing tenuous about it at all. Covid was easily treated early, as Dr. Zelenko was doing in March 2020. I was reading the other day, about Italy being hit hard at the beginning, with an IFR of 14.5%. Zelenko only lost .5% of his 400 high risk patients put on HCQ.
All that was needed was early treatment. The pandemic would have been over, barely after getting started.
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Doug78
Doug78
3 years ago
Reply to  RonJ
You are using hindsight which has 20-20 vision. At the time no one knew if covid would be a killer like the 1918 Flu or not but when China shut down it didn’t look like covid was benign at all.
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