China Services PMI Crumbles To 2nd Worst Level On Record

Tyler Durden's picture

Following the missed expectations of the Manufacturing PMIs in China, it appears 'reform' is having the exact slow-growth-inducing credit-creation-dampening effects many had worried about (but dismissed because - well the Fed has out back right?). HSBC's China Services PMI slumped by its most in 8 months to its lowest level since August 2011 (the 2nd worst level since the data began). New business expansion in particular dropped to its lowest level in 6 months and while labor market conditions improved marginally, HSBC - desperate to cling to some silver lining - noted the Composite PMI remains above 50 (phew) - adding "we expect the steady expansion of manufacturing sectors to lend support to service sector growth..." or not. Markets are disappointed...


This is also the slowest 'expansion' of Services relative to Manufacturing since April 2011



It seems JPY and US equities need Bernanke to start talking again very soon!!!

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Cult_of_Reason's picture

It's impossible! China is fine... China is not in trouble. Don't be silly... don't move your money.

Cramer said China is recovering and accelerating. US stock market is at an all time high because of strong global economic growth.

And Chanos said:

"You have a credit system gone crazy there. New debt has been running anywhere from 30 to 40 per cent of GDP a year. Think about that for a second...

Their economy is growing 10 per cent nominally, 7.5 per cent real and 2.5 per cent inflation. If you are growing your debt at 35 and your economy is growing 10 a year, that means that new debt is growing 25 percentage points greater than your economy. And using the old rule of 72, that means you double your debt to GDP every three years. So when we started looking at China, total debt in China to GDP was about 100 per cent of GDP. It’s now about 200 per cent...

They don’t know how to change this model and we’ve been talking about it for three years. The problem is it simply the same story. Stick a shovel in the ground, put up another building, another stadium, another railroad…at this point, the returns are minimal. We saw on your newswire (Bloomberg) yesterday, about 50 new international airports being green-lighted in China. And really there’s only room for five or six..."

ghostzapper's picture

Just one reason why the Chinese people will continue to go crazy over bitcoin and do whatever it takes to get it. They know it's all bullshit the entire house of cards. The leadership knows the peeps know this so they will continue to be scared shitless of bitcoin and jawbone blah, blah, blah.

the yuan as the global reserve currency ha that is a funny one. Christ almighty how many yuan have been/are being printed.

Cult_of_Reason's picture

Even Christ almighty has lost count a long time ago.

And US is heading for another deflationary depression. No matter how much Bernanke prints, how many times Geithner declared US reaching the "escape velocity," the velocity of money is plunging.

TruthInSunshine's picture

Viva la recovery!

The next global meltdown has begun in China & Japan (for different reasons, but begun it has nonetheless).

All the fiat printing in the universe can't stop the train wreck from occurring.

GetZeeGold's picture



Crumbles.....not sure I like the sound of that.

ghostzapper's picture

I concur.  The velocity of money over the last 2-5 years . . . . . well let's just say there's a very clear trend.  

I think they are being literal.  They are going to print until people completely lose faith in sovereign fiat.  They are tipping you off.  ECB is next with QE.  They are trying to manage it like the drugs for alzheimers.  They don't cure it or fix it they provide a parachute for the inevitable decline down.  

samcontrol's picture


China scared of bitcoin ? :)

ghostzapper's picture

I agree (I'm jumping the gun on your sarcasm/humor).  China being scared shitless is EXTREMELY bullish for Bitcoin.  

walküre's picture

Domestic flights in China are unreliable as hell. 50 more international airports are just going to make matters worse. When you pay the vast majority of your people shit for wages, there can't be a miracle economy. Other than the low wage model, China has no story. It worked for a couple decades but that is coming to an end over there.

q99x2's picture

The reason China has done so well is because they have a Chinese printing press. The American FED one doesn't work nearly as well. When the nuclear exchange between the US and China takes place they will have brand new cities to move into and the US will have a bunch of neocons crawling out of bunkers all fighting and killing each other for a place to live.

If the US hopes to compete in a global economy those cheap bastards over at the FED better get a faster machine.

lakecity55's picture

They will team up with the no such agency and pirate everyone's printers in an effort to keep up.

"Look, mom! I went to print out my homework and these twenties came out!"

hootowl's picture

.....a place to  After a nuclear exchange with China, the lucky folks will already be dead.

The survivors will die slow, agonizing, deaths, in chaos and turmoil, with no medical care or painkillers, or euthanisia, to hasten the end of the suffering.

Colonel Klink's picture

They're gonna need a bigger Abacus!!!

Zero Debt's picture

But do they have the balls?

Colonel Klink's picture

I don't think there's that many balls on the planet.  If they do, it's a calculator(ed) risk.

I am Jobe's picture

You forgot Mark Mobius in the mix. 

Leonardo Fibonacci2's picture

Wall Street tomorrow will not need la Cosa Nostra, it will the Koscher Nostra of the likes of Blankfein et al.

Four chan's picture

so its either record pmi or worst ever, make up your minds legions of chinese number manipulators.

Seer's picture

The officials can ONLY give good numbers.  It's all the wild-ass-guessers (the kind that you have to pay to get a coin toss) out there that are all over the map.

We KNOW that the US govt and all the "respected" organizations in the US put out shit.  The Chinese have more centralized control, so, yes. the numbers will ALWAYS look above water.

lakecity55's picture

It is difficult to find good numbers anywhere today.

IMO, we have no real idea with each dotguv massaging numbers.

Only at ZH do I find some real stuff, plus the links Tylers provide. We all know huge prinitng of fiat is no good, none of it is getting to main street, and bank accounts have been looted (Cyprus).

So, even with suspect numbers we know it's bad.

Like Fucko-Shima, no real numbers, but plenty of anecdotal evidence it is bad.

Carry on!

Time once more for the new year, the LC bullet point:

"Run, men! We drilled too deep! She's gonna blow!

Ryan7's picture

I am a Chinese.

I have to say that the economy in China isn't as good as you guys think. 

It's on the brink. 

Wait and hope.

FieldingMellish's picture

You must learn to master the art of sarcasm.

Seer's picture

Are you saying that you work for the PRC (and therefore have the real inside info)?

indygo55's picture

You know I read all the time how these numbers are totally manipulated and I agree. So the Chinese PMI crashes and the markets are disappointed. Isn't that then what they want?  Isn't that part of the theatre?

DirkDiggler11's picture

Yea, where this is where is gets just comical. The particular report released tonight was the HSBC Services PMI report, as opposed to the official govt numbers everyone across the globe already files under fiction.
So, one of the most illegal and corrupt banks in the world, HSBC, "money launderers of the drug cartels" is supposed to compline this services PMI report, amongst others, and we are supposed to have more faith in HSBC's nums than the Chinese govt official report.
Personally, I think BOTH of the numbers are total bullshit.

Seer's picture

"BOTH of the numbers are total bullshit."

There, simplified it!

Really, 10% YoY growth was to last forever.  And then it was 7% YoY.  At those rates it was always a certainty that they'd crack sooner rather than later.  And as an exporter to a world where everyone else is either in recession or depression? (and not be exporting essential commodities?)

thestarl's picture

Agreed Seer, I work in the mining industry in Oz, to be more exact an underground met coal producing in excess of 3mtpa of premium coking coal.The previous CEO of the company Marius Kloppers was banging on about Chinese growth rates in the double digits as far as the eye could see.

This same prick who in my opinion was a complete fuck up walked away last year with some mind astounding severance package north of 40 million usd makes the above stupid bullshit forecast, man you know this thing is going down,who knows how long they can keep the game going?

We do know that the one percent have hedged their bets with property purchases every fucking where but I believe in karma and those dogs hopefully will someday face retribution.

BudFox2012's picture

Does this mean Ann Margret is not coming to Shanghai?

LetThemEatRand's picture

You'll know it's bad when China starts buying made-in-Germany worker safety nets for the worker dorms to "protect" the line workers.

SumSUN's picture

OMG so bullish!  Can't wait to go long the DJIA tomorrow ha jk.

MrSprottJr's picture

I am NOT Chinese.

I have to say the economy in China is as good as GOLD!!!

It's like a BRINKS

Wait and See!

RagnarDanneskjold's picture

Cash crunches, are like, not good for the economy man!

Mentaliusanything's picture

Buy, Buy, Buy you American Imperialists Dogs or its bye bye to Stawks. You sell Stawks and buy made in China. Money made round to go round you silly round eye

chump666's picture

haha and these f*cking idiots at the Fed don't know how their Wall Street money printing works!  China will liquidate their holdings rates will spike, once Yelland takes the chalice we will have to see if she can muster a trillion a week.  While she loses control of the curve and $...and stocks.

2014 stockpile that popcorn


Soul Glow's picture

Something like that.  In the meantime I'm thinking stocks will fall 10% - 20% worldwide.

Gold to $1300 by the end of the month too.

chump666's picture

We are due for a major sell off, I am looking for a free-fall on the USD which the Fed won't want, Asia will just dump.  Interesting to see if Bitcoin and Gold rally in tandem. 


Seer's picture

I think if dumping starts then it's all over in a matter of a day or two (like in the movie Rollover).  And if it goes that fast the door shuts on Bitcoin for trade; gold is already out there.

TruthInSunshine's picture

The Fed has to keep yields on the 10 & 30 year from rising further, which they'll fail to do (it's nearly an impossible task given what's happening globally).

We're about to see the damage that 5 years of asinine central bank radical interventionism that broke all markets has wrought.

chump666's picture

Definitely.  And to think Bernanke who is 100% responsible for the upcoming chaos is about to leave the ship.   Yelland will lose control of everything and she'll get the blame. 


Soul Glow's picture

White haired old white women will be taking the fall with LaGarde and Yellen at the helms.  Hopefully Greenspan and Bernanke get chased through the streets as well.

chump666's picture

Rollover nailed it.  It was about a middle east crisis right and Arabs were liquidating?  Can't remember.  Asia can liquidate and you'll have that panic, I think Bitcoin could be shutdown easily, physical gold can't.  China has been stockpiling.

Colonel Klink's picture

Remember Rollover was made back in 1981 when the Arabs held a substantial amount of US Treasuries and bank deposits.  This is now 2014, what happens if China starts dumping theirs on the market en mass?  Similar to when the Arabs were to withdraw their funds from US banks.  Similar in effect.  Both will cause a run, and flood the market with US dollars.  Both these are hypothetical but eventually that swan will land one day.

More_sellers_than_buyers's picture

My father, a wise man RIP, used to say that when the shit hits the fan there is not enough money in the world to stop it. Its too big.  I took that as mantra my whole life.  But now, nothing matters any more.  So China wants to dump a few trillion, big whoop, there is no market to affect. Just an electronic backstop bid that never goes away until the tide rolls out.  Its all a waste of time.  Im goin fishing

monopoly's picture

And on and on it goes. Tyler, this might interest our readers.

I'm Suing Over ObamaCare Exemptions for Congress WSJ Senator Johnson, Wi.
Soul Glow's picture

Maybe Bernanke can get a jon at the PBoC.

Soul Glow's picture

I meant to write "job" but jon works better.

Colonel Klink's picture

If it's over at the PBoC, he'll more than likely get a Dong instead.