Sydney Leng with South China Morning Post: China’s economy is worse than it seems – even before trade war bites.
Analysis of provincial figures indicates growth in many parts of the country may be less robust than the headline figures suggest.
According to the inflation-adjusted growth figures for the first six months of the year from 29 provinces, only 15 fared better than the national average, compared with 21 during the same period last year. The number of provinces below the national average rose from seven to 12 during the period.
While Chinese provincial GDP figures are often less trustworthy than the nationwide data due to political intervention, they can paint a general picture of how the economy is doing across the country.
White House economic advisor Larry Kudlow: China’s economy looks “terrible,” and that investment there is “collapsing.” But the data show a more complicated picture.
“I’m not a China expert, although I’m boning up as fast as I can, I would just say right now their economy looks terrible,” Kudlow said Thursday in response to President Donald Trump’s question at a Cabinet meeting about China’s prospects.
Kudlow also said the latest data showed that “retail sales, business investment is collapsing.” “There may be some manipulation” in the currency and “investors are moving out of China because they don’t like the economy,” he added.
Finance reporter Elaine Kurtenbach wrote in WAFF: Asian shares fell Thursday after deepening worries about global economic growth, particularly in China, set off a rout on Wall Street.
Earlier this week, reports on growth in factory output, consumer spending and retail sales in China were all slower than expected.
An unexpected drop in profits for Chinese tech giant Tencent rattled investors, adding to recent concerns about the health of China’s economy.
Financial journalist Charles Wallace said with Forbes: Clear signs are emerging that Chinese opposition to President Trump’s trade demands is beginning to crumble.
The Shanghai index is off more than 25 percent in the last year and the Chinese currency, the renminbi, is down more than 6 percent against the U.S. dollar.
Chief Economist at Mastercard Inc. Yuwa Hedrick-Wong: the recent decline of the Chinese stock market signals that the slowing economy is being affected by the trade war and therefore heading toward deeper troubles.
Slowing economic growth in China has led to the weakening of its currency, which in turn portends more difficulties ahead.
China’s debt level rose to among the highest in the world measured as a percentage of GDP, and has led to dire warnings of a coming financial crisis.
Ruchir Sharma writes with the New York Times:
China is vulnerable to the strong dollar for different reasons. Unlike Turkey, China does not run a chronic trade deficit and does not have to borrow heavily in dollars to finance its purchases abroad.
China also faces a serious risk of capital flight. China is in a tough spot. The strengthening dollar threatens to provoke more capital flight out of China, but any effort to shore up the renminbi in response could further slow the Chinese economy.
Followcn Staff Editor