Not The Chinese Numbers Anyone Was Hoping For

These are not the numbers to put anyone’s (rational) mind at ease. China’s data dump wasn’t terrible, but it didn’t need to be in order to amplify concerns about the state of the global economy. What the inflationary case required of the Chinese government instead was unambiguous, inarguable acceleration more consistent with the idea its economy is somehow performing up to that inflation potential.

Again, these are in no way those figures.

On the contrary, the economic accounts make it very clear China’s at or past its peak rate for whatever global recovery 2021 might offer. In other words, it really hasn’t been much and this doesn’t look in any way like it will change (at least not for the better).

Starting at the top (line), according to that country’s National Bureau of Statistics (NBS) nominal GDP in Q2 2021 was 12.7% more than during Q2 2020. With base effects still skewing the results, the more appropriate 2-year comparison was a compounded 7.8%. Though the highest since last year’s recession, still significantly less than the insufficiently low growth rates which had stubbornly become common in the years before COVID.

In only goes downhill from here.

In terms of real GDP, or GDP at constant prices, the year-over-year increase in Q2 was 7.9%. The 2-year compounded change another ugly 5.5%. While 50 bps better than Q1, really no different at all than the trend being set by the last five quarters since the 2020 recession.

Like nominal GDP (and pretty much every other estimate here), that 5-quarter “recovery” trend measures substantially less than the declining, decelerating economic condition which in 2018 and 2019 put China on a collision course with what then became the globally synchronized downturn.

If pre-corona growth rates had been consistent with not enough global growth, what does this extended and extending post-COVID condition indicate about global potential moving forward?

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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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