Is China's 'Real' Economy Crashing?
As Marc Faber noted, we hardly expect China to report GDP growth rates that do not perfectly fit the goal-seeked solution for utopian society, but under the covers, there appears to be some considerably more ugly real data. One of the hardest to manipulate, manage, or mitigate for a centrally planned economy is Electricity production. The year-over-year drop in China's electricity production is the largest since the slump in Q1 2009; and the seasonal drop (associated with the New Year) is the largest on record at 25.3%! So on one hand China is discussing tightening monetary policy amid inflation anxiety and a potential real estate bubble - thanks to the rest of the world pumping free money - and on the other hand Chinese officials are faced with the reality of a drastically slowing 'real' economy. At the same time, we note that it appears China's export-import data appears overstated. Rock meet hard place.
Biggest seasonal drop ever in China electricity production and worst YoY drop since the crash in 2009...
And as Bloomberg notes today:
Widening differences in bilateral trade data reported by China and Hong Kong suggest export-import activity is being overstated by the mainland as companies report inflated figures, according to Mizuho Securities Asia Ltd. The chart below compares China’s data on monthly exports to Hong Kong the past two years, with counterpart figures from the city on imports.
China’s numbers were 47 percent higher than Hong Kong’s in January, compared with a 13 percent difference two years earlier. The lower panel shows reports during the same period for China’s overseas shipments to the U.S., using each nation’s official statistics, where the differential has remained more consistent.
Exaggerated trade figures would mean that China’s new leaders, who take over the government at the National People’s Congress this week, are failing to get the boost from global demand that the data indicate as they try to sustain a rebound in the world’s second-biggest economy. Hong Kong passed the U.S. in November to become the biggest export market in China data.
Exports to Hong Kong from China rose 60.9 percent in the first two months of 2013 from a year earlier, compared with last year’s 20.7 percent gain for the full year. “This seems inconsistent with the pictures of the final demand in both Hong Kong and the countries for Hong Kong re-exporting,”
The report (http://images.mofcom.gov.cn/zhs/201301/20130125145056637.pdf) from December 2012 shows that shipments via Hong Kong and other intermediary countries or regions, as well as sales through resellers, account for most of the discrepancy in the nations’ bilateral trade data.
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