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Chinese Exports Fell 23% YoY In July
Shortly after Wen Jiabao's statement that China will maintain its stimulus, Bloomberg reports that Chinese exports tumbled in July and industrial output numbers came in under consensus. The former is significantly more troublesome, though as this drags on industrial output is going to become a bigger part of the story.
With exports falling 23% and industrial production "only" gaining 10.8%, the Chinese government is going to have to pump in a whole lot more stimulus. The truly puzzling part has to be the following quote:
The government wants to avert bubbles in stocks and property and bad loans after a record $1.1 trillion of lending in the first half helped to drive a 7.9 percent economic expansion in the second quarter.
Disregarding the inherent contradictions, we have to wonder how else they see this story ending? If they mark GDP to the traditional pegs (US and Euroland demand levels), the results will be catastrophic. However, pumping in massive quantities of stimulus from state-run banks to state-run companies and mandating forced lending to keep the spigot open is far from a fool-proof plan "avert bubbles in stocks and property and bad loans".
The other details in the article do little to bolster confidence. With growth being essentially funded by government-mandated liquidity and an alarmingly small proportion of consumer demand, it's especially troubling to see urban fixed-asset investment rising 32.9% by July.
In the continuing footrace between a global recovery and the Chinese madly building an ever taller house of cards, it is tough to see this ending well. Incredibly, it is possible to imagine a scenario in which this all works out. The odd situation of Communist central bank control and political agenda combined with the current market outlets leads to an ability to blow through most of the traditional macro buffers that the rest of us face. Despite Goldman Sachs' estimate of 9.4% growth this year, the Chinese economy continues to show signs of strain at the edges.
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kinda reminds me of: http://www.youtube.com/watch?v=rSjK2Oqrgic
(it never gets old...)
Excuse this rather long post. I want to include some pastes. There is another point also that could be applied here, and applied to all these Numbers we are getting. Its important to understand, when dealing with Percentages, there comes a point when the Increases or Decreases need to be considered with the previous data, and the compounding effect. Take Unemployment, for example; there is a ceratin amount of jobs that Must be retained---so when a report comes out that shows a lower number than the previous, its coming out of a shrunken, or call it a less filled glass coming into the report. Likewise with Increases, you just simply can't have sequential Monthly or QTR'ly Gains, like the 70%ish gain in Auto Sales, or the 15%+ Gain in retail sales --- even the Income number in China ---of course it can't keep posting double digit gains ----so up or down, no matter what the report is on, remember to look at a bigger picture, more of the past data --- OK, I know its a lot much of it copy/paste just to glance at;
The China numbers "could" easily receive write-ups, articles, etc., giving an opposite point of view. 23% drop in Exports, not a problem, especially considering its mostly a decrease in US Imports that only would have added to that Credit Card Tab we already are having a hard time just to pay the Interest on. [ plus, which Manufacturer/Owner do you think will be the first to see a loss in Sales---the China Owned, or the Foreign Owned or JV'd ?
Internally China had a "better than expected" Retail Sales Number @ over 15%. But even though this could have been used, had a writer wanted to put out a Positive view, Big-Picture wise China is doing just fine. Look at items like Auto-Sales for example. Yes, China replaced the US as the #1 country for New-Auto/Vehicle Sales, and here too the Number is "better than expected. I'm sure most of recent articles mentioning things like "Bubble", when China is discussed, will have some of the intended effect on share prices in the short-term. However, I would guess that so-called Smart-Money will be using any pullbacks to Buy or Add, and that could be the reason for such articles.
I don't want to mention any stocks but I did Add yesterday to two China stocks, one of which is/was already my largest holding.
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According to figures released by China's National Bureau of Statistics, China's retail sales in the first half of 2009 reached about CNY5.871 trillion, a year-on-year increase of 15%.
The bureau stated that the growth rate was 3.7 percentage points higher than the same period of last year.
In addition, China's retail sales in June 2009 also increased by 15% compared with those in May.
Chinese car sales explode by 70 percent======================
Sure, posts can be put up with Headlines that would be viewed as Positive; Example:
Published: 10 Aug 2009 18:21:46 PST
China's auto sales are redlining. First to recover from carmageddon China had jumped into double digit growth territory in February and never looked back. Months after month, the increases became bigger. Now, they explode.
“Sales in the second half will continue to be strong, even if there’s a slight slowdown in growth rates,” said Ricon Xia, an analyst at Daiwa Research Institute in Shanghai via Gasgoo. “Not only has demand for small cars been good, bigger vehicles have started to recover as well.” Cash for Clunkers notwithstanding, with numbers like these, China will easily outdistance the USA as the world’s largest car market in 2009.
CHINA SECURITIES JOURNAL
-- The international finance institute of the Bank of China said in a research report that China's exports are likely to recover in the second half of this year, partly due to an expected upsurge in trade after the bottoming of the global financial crisis
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and China puts heavy penalties on white-collar crime, especially when its The People who are the ones that got robbed. That's quite a detterant
posted: 07/17/2007 01:00:00 AM MDT
Last week, China executed its former top food-and-drug regulator, Zheng Xiaoyu, 62. He was most likely shot in the back of the head or given a lethal injection. The official Xinhua news agency did not say. The point is, he was taking bribes from pharmaceutical companies, and now he's dead.
Earlier this year, China put to death Wang Zhendong, chairman of Yingkou Donghua Trading Group Co.
Wang was accused of swindling more than 36,000 people out of $385 million.
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This recent from CBS News:
http://www.cbsnews.com/stories/2009/08/07/world/main5223388.shtml?source=related_story
BEIJING, Aug. 7, 2009
China Airport Exec Executed for Corruption(AP)
The former head of Beijing airport's management company was executed Friday following his conviction on corruption charges, state media reported, making him the latest figure brought down in China's battle against widespread graft.
An intermediate court found 60-year-old Li Peiying guilty in February of accepting almost $4 million in bribes and embezzling about $12 million in public money since 1995, the Xinhua News Agency said.
Li was executed after the Supreme Court upheld a lower court's rejection of his appeal, Xinhua said. The report did not say when the Supreme Court ruled, and it did not describe the method of execution.
Reports said Li's attorney had argued for leniency, saying his client had returned the stolen money.
China has long struggled against corruption among high-level Communist Party officials, especially in state-owned enterprises in the energy, transportation and other key sectors that wield vast political influence and access to state financing.
Li's execution came two days after word emerged that the head of China's nuclear power program was under investigation for alleged corruption. And just last month, the former chairman of China's second-biggest oil company, Sinopec, was convicted of taking $29 million in bribes and given a suspended death sentence. On Thursday, state media reported that two businesspeople were put to death for multimillion-dollar frauds.
In handing down its sentence in February, the Jinan Intermediate People's Court said there was evidence that Li had solicited the bribes, making the crime more serious. It said the amount of public funds Li stole resulted in "extremely large economic losses" for the state and constituted an "extremely serious crime."
See all 11 Comments
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2009-01-25 14:30:36
China has a history of extremely harsh penalties for this type of crime within the buisness world. There have been a number of CEO's executed, just as there have been a number of government officials executed for corruption.
2009-01-25 22:30:47
Used to discuss these topics with some law students when I worked in Hanoi (over 10 years ago) and they explained that under the law...Chinese -Vietnam etc someone who steals from a private company/joint verture/overseas bank might get a whack on the back of the hand and do a stint in the local nick.
On the other hand if you pinch a bag of rice from a state monopoly or anything that affects the people ...then its the big one..usually a bullet in the back of the head.
The family is then sent the bill for the round and are expected to pay it.
Ultimate Loss of Face ......
More stimulus please.
More like x2 IMO. Anything bad is play down in Communist China. USA isn't far behind tho.
Given the official numbers and the need to subtract 5-20% from anything the Chinese report their bamboo shoots have to be cracking.
.
I'd like to better understand the last part of the post.
Certainly, the Chinese have done quite well, relatively speaking, these last few years. No need to expound on the obvious issues regarding the majority of the population living in abject poverty... making the Chinese value proposition, essentially, cheap labor and lots of it.
Central planning always ends badly. I recall the Japanese were gonna take over the world with the same concept (Kiretsu). How'd that work out for them? There might be a few other examples.
Here we have the Chinese central planners not only doing the incredibly silly things all governments do, but they juice it up a bit using the generic (police state) strategy they apply to all their policy enforcement. Layer on government panic over civil unrest and you get silly short-term decisions made even if they know they're silly whereas other governments may actually believe their idiotic interventions will help.
IMHO, longer term, China will go through a number of catastrophic financial and social events... its axiomatic to central planning... So I guess I don't have the same "imagination" you have about them getting out of this crisis... at least not in the medium term.
yes miti was the darling of the statist socialist
left in amerika and akademia because what the
world needs now is control sweet control from
brilliant central planners...but as in all elitist
fantasies, the truth eventually triumphs and has
shown miti to be an effete douche bag in the
face of economic headwinds.....
a recent zh article suggested that chinese export
profits have been substantially overstated for
several years....thus it is possible that their
foreign reserve holdings are materially less than
is commonly believed...substantial yes but
probably smaller....
and finally it cannot be stressed too much that
the communists are no friends of the truth - i
remember tianamen square and the murderer bush's
acquiescence to it....i suspect that their
economic numbers are as truth challenged.....
without any trends i would not make too much
of the decline except to note that it is consistent
with the widely reported declines in electricity
consumption....
while everyone is envious of china's command
economy including the totalitarian pope, it too
is subject to the laws of economic intercourse
and as such does not have a solid footing insofar
as its western oriented export dependent economy
is concerned....chinese stimulus eventually
fail too...
Here's my own conspiracy theory on what jump started that economic event formerly known as the Japanese Economic Miracle: MITI's selective belief in the sanctity of the international patent.
Why? In 1960, after jack Kilby at Texas Instrument invented the microprocessor, TI applied for various patents around the world, including Japan. While Japan considered the application, MITI made sure that Hitachi, Fujitsu, Toshiba, etc., were given all relevant information about what Kilby had done. Shortly thereafter Japanese companies began to produce microprocessors, but were able to price far below TI since they did not have that little thing called development cost to recover. Neither did they pay a license fee.
Japan, Inc. was born.
The original Kilby invention was finally granted a patent in Japan in 1989.
Some estimates put Japan's gain by ignoring international patent law at upwards of $1 trillion dollars, which would arguably make it the greatest theft in the history of the world.
Uh, knock knock?
Look around you.
And to top that off, study the top 10 companies who have been granted US patents over the last 10 years. 80% of those companies are headquartered in Japan. If we(USA) revert to a country that invents and manufactures real tangible products like we did years ago, the manufactures may very well have to pay a Japanese company to make and sell the widget.
Right, "the greatest theft in the history of the world" . . .
You severely shortchange our beloved American financial oligopolists. That would be US(A). Reality hurts . . . but that doesn't argue for ignoring it.
Time to applaud Amerikan Kapitalism now?
Slumping exports + industrial overcapacity + stimulus = FUBAR.
If you're investing in China, bear in mind that it's more like a play in Macau rather than Shanghai and Hong Kong.
I wonder sometimes, if there are some people who doubt that interference in Iraq is for Oil and Afghanistan for Opium(Heroine).
Are they in denial about 9/11 still?
The American Patriot mocement was derailed more than a decade ago, by pinning the OKC bombing on 'crazy patriots' like Timmy Mc, the brainwashed 'former' soldier.
The sooner we are all on the same page, the better.
Sell crazy somewhere else pal. We're all full here.
I listened to him and agree with him. Don't understand the heorine thing but I watched the 9/11 disaster all day. I remember thinking the metal in that building is giong to get hot and it's going to start bending and breaking. 30 minutes later the building fell down. I also remember watching the tons of cherry red sparks coming from a thermite burn streaming out of the building years later. And I beat the crap out of my guides for being reasonable but not entirely truthful. The general consensus in china about 9/11 is that it was an internal coverup. Same in Russia. Not because I want that to be the general consesus. But because I looked.
Never attribute to conspiracy when incompetence is more or equally likely.
China is full of surprises and manage everything fairly well.
If you really feel like commenting first read mpettis.com
Chinese economic statistics are gathered at the Provincial level then collated at the center.
The Provincial Governors are given targets than told to report on the results.
Guess how many Governors miss their targets?
Certain other statistics are gathered differently, which is why China can claim 8% economic growth in the face of a 14% collapse in imports and 23% collapse in exports.
You can't believe any figures out of China
I think that you misunderstand the importance in the industry in China, to classify the investments made from offshore as anything bar capital investments from offshore.This avoids problems on external investments being declared.
Hence the numbers that are supplied from industry are skewed.
Regardless of the figures the simple fact of the matter is that the powers that be have a handle on the internal machinations of what has evolved and what will evolve. It may be a bumpy road but the need to instigate consumer demand, to replace export demand and maintain employment is the key.
The Condo's are for investment as the interest rates for investment are negative plus and a big plus is that under the one child policy, it is opportune for families to acquire a Condo (whether it is lived in or not) to allow their child a chance of a city university study (rseidence has a bearing on uptake in Uni's plus the loans are very cheap.Now look at how many millions of people we are talking about here! The offshoot is that the construction industry is the prime mover and raw materials suppliers are necesary. Both full employment areas.
Stockpiling commodities is no more that transferring USD through to physical assets.
Overall the beneficiaries of the programs instigated at the end of the day will be for the chinese not for the westerners. Whilst the need is for export driven GDP a transition through to consumer driven GDP is not that far away and they have sufficient reserves to at least try to stimulate this area of the economy.
posted before - in my view Pettis is by far and away the best blogger on China
http://mpettis.com/
"China is full of surprises and manage everything fairly well."...Sorry that one has me laughing,...China is a 3´d world corupt communist dictatorship,...dictator put a gun to the head of the dictator´s bank and said "lend or you die",..gave the money to corupt speculators who blew a bubble in every asset in sight (except for export production,..that one already fully booked),..ups! did I forget,..export was what they had going for them,...chineese savings, chineese domestic demand,..(laughing again!)..if you knew anything about China you´d know they them selves know it´s not going to happen,(at least for a decade)..its all part of the propaganda the govt need to justify holding power,...but for the time I guess they can even export it to the west as "green shoots",..I guess that´s why western media and politicians love to believe in this crap,....How did communist propaganda ever make the frontpages of the western media as credible information,..is beyond me,..like selling Pravda on the streets of N.Y in the 1950´s (it simply should not be possible),...China growth at 6-8 % (but in need of a stimulis),..you don´t even need a brain to figure that one out (or maybe Kaynes grew up in China?)
I like peter schiff,..but so wrong on China,...Roubini, you are so dam smart,(and I say that with love)..but why are you putting Chineese propaganda into your equations?....
China manage things well,(you better pray they do)..they got poverty, opression, nukes and a shit load of dollars,..so surprise (not to me)maybe to some,...but don´t expect it to be to the upside!
Unless ofcourse you just think like a short term wall-street speculator,..just waiting for the next "govt.official" (theirs our ours doesn´t matter)lie that we can have a rally on!
If the Chinees manage anything well, it is to get out of u.s holdings under the radar (shift for the long end of the yield curve to the short) and buying everything they can with dollars that doesn´t have a U.S. govt. logo on,..AND do so before Japan and the Saudi´s catch on (what do you really think goes on at those BRIC meetings?,...they just want to make sure nobody in the club hits the panic button,...but they all cheat,.just like OPEC)
China is in deep deleveraging (and not diversifying),..hungry for the American consumer to be extended some more credit so we can continue the imbalance,..not going to happen,..the imbalances have blown up. Equilibrium is being forced upon the world, can not be stopped and it will be painfull for all, including China.
"Manage everthing faily well",..buy a plane ticket and go see for your self,..but don´t forget to travel the poor country side,..and keep ind mind,..they manage opression, poverty, nukes, and a piggybank with 2 trillion dollars,.nothing more, nothing less!
Obviously you know nothing about communism and the writings of Marx, or you would know that "communist dictatorship" is a contradiction.
Also, a plurality of China's leadership is made up of former engineers whereas the United States government consists largely of former lawyers. (source: The Economist) Who do you think would better be able to run a country, lawyers or engineers?
I rest my case.
+1
Touche`
And with Prof Pettis' students already in the Government and able to contribute to the econo-fest and discussions before decisions are made then the results will be in favour of a short term increase in unemployment whilst the internal consumer demand is boosted through higher interest rates and wages.
China has US1.7 trillion to play with and they can keep pumping until the rest of the world catches up. Just depends on how much they pump and prime the internal wages to promote the internal consumption.
As I said before, you know nothing of their mindset and what they want to acheive.
Just recently returned from Beijing and Chengdu. The cranes are still swinging at the top of no fewer than 5 high rise residential development projects per square kilometer in each city. 7 days a week 24 hours a day the projects are in high gear.
Many finished building sit completely unoccupied. The government has halved their required payment for leasing the land and developers have added to the discounts by reducing prices 25%. Craziness.
But Turbo Timmy promised that he would turn things around...
Again someone that doesnt understand the mindset of the investment regime nor the need to invest in Condos.
Go google Ghost Condo's and read why these units increase in rice year over year.
Better still get your head out of your a$$ on western thinking and realsie that your opinions mean jacksh!t in china.
Ginseng and "green shoots" on the menu this morning. Excellent!
Not unexpectedly perhaps, Yahoo! has a somewhat different take on this:
http://finance.yahoo.com/news/Chinas-trade-factory-output-apf-2546564942...
Yahoo? You get your news from Yahoo?
China's Mirage: THE pin that pricks the global reflationists' bubble.
What do you all cognoscenti have against China? Is the rancor because of it is communist, is it because of small yellow people ? Or is it because they lend money to US. End of the day it is all about race: China can organize our revelries, but no they cannot sit at the same table as us at the banquet. The envy and ill will that shines through never ceases to amaze.
Race never had anything to do with it,..and they can be blue for all I care,..I have nogthing against 1.3 trillion hard working Chineese (those of them that still have a job),.. my beef is with the 4000 polit bureau elite (dictatorship),..and the stupid western politicians, media and beurocrats who tell me lies to base investments on,...its about facts,facts, facts,...forget the racecard wrong website.
That still doesn't explain the china obsession - why are we being so judgmental about China or it's political system when we are not able clean up our own house? What is going on here has nothing to do with China? Whatever is going on there it is their problem - Are we trying to make China the next boogeyman ?
No boggieman,...just the fact that pundits in the media are trying to sell a recovery greenshoot story based on the "wonderfull" economic situation in China,..that is why it is relevant to os how they do things,for analitical purposes..not trying to spur a revolution, just don´t be in denail of the socio/economic facts!
And lets not derail an important economic topic of what the reality of the Chineese economy is, by talking ridiculously irrelevant subjects like race,...or do you work at CNBC?
Could you explain the CNBC - Race connection ? Don't get your panties all in a bunch. The reality of the US Economy is what matters to me and I do not understand a direct connection between the two economies except that Chinese is bankrolling us mostly. There is a boogeyman mind trap here and I am just pointing that out. Every time we get close to figuring out what is wrong with our own systems a boogeyman is presented to deflect the attention and the blame so that perpetrators can continue their shell games. Sometime back it was jews, then commies, then the Japs (not so much), now it is the Chinese. If the Chinese is making money it is because our corporations are willing to send our jobs overseas so they squeeze more bonuses and juice their options. Let us keep our focus on our problems - that is all.
We are worlds apart,this site is not intended for political ideology..so I will end it here,.but thanks for the chit,chat Chinaman,...good luck with the greenshoot propaganda.