Were You Wondering Whether China's Economy Has Gotten Worse?
Picking up on yesterday's comments about China's official weekend announcement, let's turn towards those intrepid investment professionals who continue to tout China stocks. For their own reasons, big Wall Street types continue to claim that China's economy is just fine thanks. Oh, you'll now occasionally find some admit that we might be in a rough patch at the moment. But that's just temporary. The world's fastest growing economy will continue growing - just at a slower pace...for now.
As the hedged comments roll in, you can't help but wonder how so many continue to tout the "China Story" - so hot for so many years - and how what we might now call a "fairy tale" continues to attract so many investors. At least you'd think it attracts investors, if the main stream experts in the U.S. are right. On the other hand, the South China Morning Post appears to be squinting a bit when it comes to China's economy. Squinting? Well, it looks like they're finding it hard to "see" what's really going on, despite their proximity to Asia's giant. And they're a lot closer to China geographically and culturally than we in the U.S. might be. It seems that China's central bank's latest reporting of economic activity has added another layer of opacity to perhaps the most opaque data reporting of all the developed and developing nations:
May we suggest that recent claims that China will only grow 6% rather than the accustomed 7% are simply not worth the internet band width such reporting utilizes. May we suggest that you consider that the unfolding credit crisis in China's private economy continues to mushroom and that efforts to downplay it are misplaced, or worse, manipulated so that investors will not continue to pull money out of China.
Do you really want to invest based on economic analysis that's made up to suit the government officials who say whatever suits their political agenda? (See yesterday's comments.) Do you really believe that the crash of Chinese stock market over the summer presents a "long-term" buying opportunity? Wouldn't it be more prudent if you faced the fact that none of the economic data we're fed by Chinese officials isn't reliable (to put it charitably); or if you realize that China's stock market remains a highly speculative, unstable place to put your hard-earned dollars?
The bottom line here is that if what appears to be an unfolding global credit crisis doesn't reverse itself in some unexpected way, China will be one of, if not the major, victim of the disaster that's currently brewing.
As the hedged comments roll in, you can't help but wonder how so many continue to tout the "China Story" - so hot for so many years - and how what we might now call a "fairy tale" continues to attract so many investors. At least you'd think it attracts investors, if the main stream experts in the U.S. are right. On the other hand, the South China Morning Post appears to be squinting a bit when it comes to China's economy. Squinting? Well, it looks like they're finding it hard to "see" what's really going on, despite their proximity to Asia's giant. And they're a lot closer to China geographically and culturally than we in the U.S. might be. It seems that China's central bank's latest reporting of economic activity has added another layer of opacity to perhaps the most opaque data reporting of all the developed and developing nations:
(The central bank) has tweaked items on its financial statements before, but the latest unannounced change comes at a particularly sensitive time when Beijing is trying hard to stabilise the yuan exchange rate.This story posted before the G-20 meeting. That meeting has come and gone. Are things any clearer now about China?
It is also just a week ahead of the G20 central bankers and finance ministers meeting in Shanghai.
“The central bank used a non-transparent method which makes the market unable to have a clear picture about capital flows,” said Liu Li-Gang, chief China economist at ANZ in Hong Kong
May we suggest that recent claims that China will only grow 6% rather than the accustomed 7% are simply not worth the internet band width such reporting utilizes. May we suggest that you consider that the unfolding credit crisis in China's private economy continues to mushroom and that efforts to downplay it are misplaced, or worse, manipulated so that investors will not continue to pull money out of China.
Do you really want to invest based on economic analysis that's made up to suit the government officials who say whatever suits their political agenda? (See yesterday's comments.) Do you really believe that the crash of Chinese stock market over the summer presents a "long-term" buying opportunity? Wouldn't it be more prudent if you faced the fact that none of the economic data we're fed by Chinese officials isn't reliable (to put it charitably); or if you realize that China's stock market remains a highly speculative, unstable place to put your hard-earned dollars?
The bottom line here is that if what appears to be an unfolding global credit crisis doesn't reverse itself in some unexpected way, China will be one of, if not the major, victim of the disaster that's currently brewing.
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