Massive Downward Revision Of China Leading Economic Index Refutes China "Recovery" Myth
The debate of China's double dip may have just been sealed after the "Conference Board corrected its
April gauge for the outlook of China’s economy, saying its
leading index for the country rose the least since November,
rather than registering the biggest gain in 14 months. The gauge compiled by the New York-based research group
rose 0.3 percent, less than the 1.7 percent gain reported on
June 15." Ignoring for a second the fact that such massive swings in amplitude imply either a malicious data misrepresentation intent or weapons grade stupidity, the second derivative in Chinese growth has now peaked, just at the time when the country for whatever optically political reason decided to unpeg its currency. We are now looking forward to the official rescinding of that decision, and a resumption of the peg. Of course, the fine gentlemen at the Conference Board, have come up with some trivial excuse, namely that the previous release contained a “calculation
error” for total floor space on which construction began, but it is now too late - the discrediting is beyond terminal. And anyone who believes this same agency for its monthly "consumer confidence" reading should ask themselves repeatedly if the CB did not, by mistake or just by following guidelines from above, drop the minus sign.
More on the damage control from Bloomberg, which is too little too late:
Stocks tumbled after the statement, which added to evidence that China’s acceleration in growth has past its peak after an 11.9 percent jump in gross domestic product in the first quarter from a year before. The Shanghai Composite Index slid 1.8 percent, the most since June 18.
“This correction doesn’t affect our outlook for the Chinese economy,” William Adams, resident economist for the Conference Board in Beijing, said in a telephone interview. “Growth was not likely to accelerate in China, and in fact, a moderation is possible. This correction also supports the same view.”
Adams said at the time of the original release that new construction work, the key factor pushing up the indicator in April, may not continue to grow so quickly.
Today’s revision showed that total floor space started in April dropped 0.1 percent, instead of the 1.3 percent gain originally reported. China’s regulators have tightened rules for the property market in an effort to stem speculation and avert an asset bubble in the aftermath of a record credit expansion last year.