CHINA: NUMBERS DON’T COUNT

For many economists, the “official” economic data from China has long been questionable. In an effort to ease global skepticism, Beijing announced last week that local governments will now start using the same methods as the National Statistics Bureau when determining economic data.

More than 800 local Chinese governments have defaulted on their debt so far this year, compared with the 100 in all of 2018. The courts are suing for about $1 billion, a 50 percent increase since the same period last year.  

China’s official National Bureau of Statistics reported that industrial output increased 4.7 percent in October from a year earlier, down from a 5.8 percent increase the month before.

Previously the mecca for venture capital funding, their technological startups are not raising the capital they used to. So far in 2019, 61 venture capital firms fundraised $12.6 billion, down from $25.6 billion raised by 170 funds in 2018.

TRENDPOST: In China, exports are falling, factory productivity is slowing, investment is at near lows, and consumer spending is down.

As we have long noted, despite President Trump’s accusation that China is pushing its currency, lower to increase exports, we disagree. 

Because China is import dependent, as per their high oil imports that are dollar based, the lower their currency falls, the more it costs in yuan to purchase goods. And the lower their currency falls, the higher inflation rises, which is already a growing burden on consumers.

Concerned with their economy slowing down, China’s central bank announced yesterday a cut in its short-term lending rate, the first time in four years. It is doubtful, however, that the rate cuts alone will stimulate demand for credit, which is essential to generate strong growth.

PUBLISHER’S NOTE: Retail sales grew 7.2 percent in October, down from 7.8 percent in September. While weakening, however, compared to the 0.3 percent rise in U.S. retail sales last month, these numbers are relatively strong.