EC China’s Hole Puzzle

One day short of one year ago, on September 16, 2019, China’s National Bureau of Statistics (NBS) reported its updated monthly estimates for the Big 3 accounts. Industrial Production (IP) is a closely-watched indicator as it is relatively decent proxy for the entire goods economy around the world. Retail Sales in the post-Euro$ #2 context give us a sense of the Chinese economy’s persistent struggle to try to “rebalance” without the pre-2008 boost China had obtained through actual global growth contributing to its export orientation.

The third of the Big 3 is Fixed Asset Investment (FAI), the real secret behind the country’s rapid modernization. FAI is how the Chinese view their own future, whether that’s as a rebalanced consumer-led economy leaping off into a brand new paradigm; or one slowing itself down to a crawl that wouldn’t require nearly so much new fixed investment in glittering new cities filled with new middle-class inhabitants and the sparkling new factories where they were all supposed to work (leaving hundreds of millions of China’s poorest citizens stranded in the largely the same subsistence-level agricultural existence their ancestors lived).

Last September, the NBS was, as usual, filled with glowingly positive descriptions of how the country’s Communist authorities had done a masterful job navigating tougher times – at least for everyone outside of China. In terms of Private FAI up to August 2019, the agency specified an accumulated year-to-date (January through August) total of RMB 23.7 trillion; a reported increase of 4.9% from the same months in 2018.

One year later, suffering a massive contraction in between, leaving the entire world with questions about the global economy’s ability to dig itself out from it, the NBS today says that Private FAI from January to August 2020 in China totaled RMB 21.5 trillion; down a reported 2.8% from those same months in 2019.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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William K. 3 days ago Member's comment

Really, yes, it is more than a bit disturbing with the question bringing up several more questions. But first we need to understand that China is still a police state, and the communist government is still a totalitarian entity. (not to be judgemental about it.)

Also keep in mind the cultural propensity for saving face.

Thus it may be that "the numbers" do not relate to reality in the standard manner that the rest of us would presume.

It could even be that the actual conditions are far less happy than what is presented, and that Superman is presently indisposed and will not be arriving to save us.

It could be that there IS "a Bad Moon Rising", with everything listed in that song being real this time. Hoping NOT!!!

Gary Anderson 3 days ago Contributor's comment

Does China want to gear up as in the past to bail out the USA again? Maybe not this time.