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Questioning China's Growth

The Wall Street Journal reports China Says Growth Is Fine. Private Data Show a Sharper Slowdown.

In the second quarter of this year, official Chinese data showed economic growth of 6.2%, close to Beijing’s target and within a percentage point of what it has reported every quarter for the past 4½ years.

A few months earlier, satellites monitoring Chinese industrial hubs suggested parts of the world’s largest trading economy were contracting. An index of Chinese industrial production created by a multinational manufacturer was pointing to lower growth than official figures. And a web-search index used to gauge how many workers return to their jobs after the Lunar New Year holidays was down sharply from a year earlier.

Beneath China’s stable headline economic numbers, there is a growing belief among economists, companies and investors around the worldthat the real picture is worse than the official data. That has analysts and researchers crunching an array of alternative data—from energy consumption to photos taken from space—for a more accurate reading.

Their conclusion: China’s economy isn’t tanking, but it is almost certainly weaker than advertised. Some economists who have dissected China’s GDP numbers say more accurate figures could be up to 3 percentage points lower, based on their analysis of corporate profits, tax revenue, rail freight, property sales and other measures of activity that they believe are harder for the government to fudge.

“Manufacturing is being hit really hard,” said Leland Miller, chief executive officer of China Beige Book, which measures China’s economic strength based on thousands of survey responses from mainland companies. “Investment is down, hiring took a serious hit, a huge hit to new orders.”

Pay Your Bills

As the trade war escalates, Beijing needs private companies to pull China’s economy out of its rut. But for some, ready money can be hard to find.

The New York Times reports Circulating in China’s Financial System: More Than $200 Billion in I.O.U.s

Caxin (hard paywall) reports SOEs Told: Pay Your Bills On Time

Tariffs Hurting China More than US

That's entirely believable. But losing is losing if both sides lose.

More importantly, the US has elections, China doesn't.

China Gold Buying

China Accuses Apple, Foxconn of Breaking Chinese Labor Laws

That sounds like trade war negotiation tactics.

Questioning Chinese GDP Again

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Benefit Australia?


China's Export Growth

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Worst Progression

Exports Down 1%, Imports Down 5.6%

​Is this winning?

Resultant Picture

Yuan Ready to Float?

No chance with capital controls and virtually no bond market.

But here's a more fundamental point.

Fiat Currencies Don't Float

Fiat currencies don't float. They sink at varying rates.

Mike "Mish" Shedlock