Bloomberg Writes: China Beige Book Shows Slowdown, Opposite Official Data
China’s economy slowed this quarter as growth in manufacturing and transportation weakened in contrast with official signs of an expansion pickup, a private survey showed.
The quarterly report, which began last year and is modeled on the U.S. Federal Reserve’s Beige Book business survey, diverges from government figures showing faster factory-output gains in July and August that have spurred analysts from Citigroup Inc. to Deutsche Bank AG to raise expansion estimates. Nomura Holdings Inc. is among banks skeptical that any rebound will be sustained next year.
The results “show the conventional wisdom of a renewed, strong economic expansion in China to be seriously flawed,” China Beige Book President Leland Miller and Craig Charney, research and polling director, said in a statement.
The data “reveal weakening gains in profits, revenues, wages, employment and prices, all showing slipping growth on-quarter — no disaster, but certainly not the powerful expansion suggested by the consensus narrative.”
Continuing our China watch, I want you to read the two paragraphs above very carefully. I have been saying all along that Chinese miracle growth story is anything but true. Yes, I would be the first to admit that China has a bright future and a potential. However, as of right now, that is all it is.
Before China can reach that potential and overtake the US Economy it will have to go through significant economic imbalances, bad loans, capital misallocation and property bubbles that Chinese government has baked into the system in return for seemingly amazing Economic growth. Yet, everything has its cost.
The Chinese government can cook its books all it wants, but sooner or later the reality will catch up to it. With China’s real economic growth slowing down significantly (as per report above), structural issues coming home to roost and global economic slowdown just around the corner, the moment of reckoning might be close at hand.
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