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Chinese Power Consumption Crashes: Lowest Growth In 16 Months, Tumbles 10% In Shanghai, As Much As 22% Elsewhere

Tyler Durden's picture




 

When it comes to Chinese (or any other in these centrally-planned, fabricated days) economic data, there is GDP and then there is reality. And as the current premier of China himself has admitted, there is no more accurate indicator of real, not bullshit "growth", than China's monthly power consumption. It is here that another rather massive divergence from China's official data (which has the world believe China GDP rose 7.5% in Q2) has appeared.

According to Economic Information Daily, power consumption in Shanghai and Jiangsu fell by more than 10% y/y in July, compared with double-digit growth a year ago, sources said. And it gets worse: other provinces, including Zhejiang, Anhui, Hubei, Hunan and Guizhou, reported a power consumption declines of up to 22 percentage points.  One could almost say the Ukraine ministry of YouTube clips has been put in charge of China's GDP calculation.

As Market News adds, the National Energy Administration said power consumption rose 3.0% y/y in July, down from June's +5.9%, marking the lowest level of growth in 16 months.

Ouyang Changyu, a senior official with the China Electricity Council, said this indicates a weak industrial performance. Just in case it wasn't clear of course. He forecast power consumption to rise 3% to 4% in the third quarter, versus +5.3% in the first half, and that the government will step up policy support for economy in the second half of the year.

Which simply means that as we reported, the only reason for the recent surge in the Shanghai Composite in July was not bets on some renewed economic growth, which clearly does not exist, but because the PBOC joined its western central-planning peers in directly injecting outside money, read QE, in banks which is then used to levitate stocks higher, a la the S&P, in attempts to boost consumer confidence and "trickle down" the wealth of the 1%... which as the US has shown for the past 6 years, has failed miserably as the one and only backup strategy the central banks have left, after which only Bernanke's infamous monetary paradrop remains.

 

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Fri, 08/15/2014 - 15:03 | 5099006 huggy_in_london
huggy_in_london's picture

... And people continue to buy AUD ....

like lambs to the slaughter

Fri, 08/15/2014 - 15:16 | 5099067 max2205
max2205's picture

China is a shithole

Fri, 08/15/2014 - 15:18 | 5099087 knukles
knukles's picture

No demand for electricity?  It's because of all the electric cars people are buying.  Good for the whateverthefuck they're good for.

Fri, 08/15/2014 - 15:50 | 5099295 disabledvet
disabledvet's picture

Take a look at KNDI's "speculative blow off." Imagine paying for a access to a car for less than your cell phone bill.

China is also the world's largest producer of coal (over a billion metric tons a year) and those prices have collapsed...mines are closing, joblessness is on the rise...welcome to the downside of "uber growth."

Having lived over there...no they're not "locusts." (See below.) Like Americans the ones I met were just out looking to improve their lot in life...and indeed were (we're?) doing just that.

Remains to be seen if their slowdown hits the USA's still total lack of recovery.

Fri, 08/15/2014 - 15:55 | 5099323 kaiserhoff
kaiserhoff's picture

Who needs electricity when they have all those Yaks they stole from Tibet?

Fri, 08/15/2014 - 16:36 | 5099573 knukles
knukles's picture

Yak Yurts 
Like a garage for your electric car.

Fri, 08/15/2014 - 19:42 | 5100306 Winston Churchill
Winston Churchill's picture

Yumee, Yak burgers and rice beer.

The yak was good, the beer not so much.

Fri, 08/15/2014 - 15:30 | 5099153 Let them eat iPads
Let them eat iPads's picture

The Chinese people are locusts.

Fri, 08/15/2014 - 15:04 | 5099012 ekm1
ekm1's picture

Just a reminder:

 

My estimation of for GDP growth in China is:

 

 

NEGATIVE 8% FOR 2014

 

it will be proven correct.

Fri, 08/15/2014 - 15:18 | 5099085 edotabin
edotabin's picture

Why? Did Walmart close or is EBT down?

Mon, 08/18/2014 - 14:47 | 5109985 Old_Shatterhand
Old_Shatterhand's picture

What did you smoke before producing this rigorously researched estimate?

Fri, 08/15/2014 - 15:06 | 5099025 Stonedog
Stonedog's picture

A FAR better metric of the Chinese economy than so-called GDP growth. 

Fri, 08/15/2014 - 15:08 | 5099030 LawsofPhysics
LawsofPhysics's picture

The Chinese are conserving energy?  Good for them.

Fri, 08/15/2014 - 15:14 | 5099059 cougar_w
cougar_w's picture

Transient. Glitches. Next quarter will rebound. Pent up demand. Upward revisions soon.

Fri, 08/15/2014 - 18:38 | 5100065 SAT 800
SAT 800's picture

LOL. Yes indeedy. Velly suspicious numbah for erectricity.

Fri, 08/15/2014 - 15:18 | 5099060 Spastica Rex
Spastica Rex's picture

Now this is interesting.

edit: Never mind - growth dropped. I should read more carefully.

Fri, 08/15/2014 - 15:17 | 5099082 thethirdcoast
thethirdcoast's picture

SERR DORRA!!!

Fri, 08/15/2014 - 15:25 | 5099112 riot-police
riot-police's picture

It is because all the poor peasants moving into the Ghost cities are not use to electrical power. Give it some time, the trickle down effect takes time.

Fri, 08/15/2014 - 15:30 | 5099148 Let them eat iPads
Let them eat iPads's picture

They're also not used to toilets.

Fri, 08/15/2014 - 15:55 | 5099331 disabledvet
disabledvet's picture

"Running water, air conditioning"...trust me, they're catching on real fast. These are HUGE cities...in some cases over 20 million!

"That's a lot of widgets waiting to find a home."

Fri, 08/15/2014 - 20:16 | 5100440 Keyser
Keyser's picture

Unless they are going to give away the apartments in these ghost cities, the folks they want to move into them, can't afford them... 

Fri, 08/15/2014 - 15:25 | 5099123 Bill of Rights
Bill of Rights's picture

I like my metals in one hand, and my cash in the other. I went cash in hand a few weeks ago, the writhing is on the wall.

Fri, 08/15/2014 - 15:29 | 5099145 Let them eat iPads
Let them eat iPads's picture

They finally gave up and turned off the lights in the ghost cities.

Fri, 08/15/2014 - 15:36 | 5099186 Doubleguns
Doubleguns's picture

Don't worry. They will make it up in Fruit and Vegetable sales to Russia. Until the Russians start dying off from the toxic food. They can't provide clean water for folks to drink. What do you thing the tomatoes, garlic, potatoes and carrots get to drink. The good stuff?

Fri, 08/15/2014 - 15:40 | 5099213 Midas
Midas's picture

Brawndo?

Fri, 08/15/2014 - 20:20 | 5100455 Keyser
Keyser's picture

It will have to be Brawndo because China is suffering their worst drought in over 50 years...

http://www.marketwatch.com/story/worst-drought-in-half-a-century-hits-ch...

 

Mon, 08/18/2014 - 14:42 | 5109944 Old_Shatterhand
Old_Shatterhand's picture

It did not prevent a bumper harvest from happening, though.

Fri, 08/15/2014 - 15:51 | 5099304 Winston Churchill
Winston Churchill's picture

In polite  company(fuck knows thats not in fight club) its called night soil.

Crap , and piss to all here.

Fri, 08/15/2014 - 15:56 | 5099337 debtor of last ...
debtor of last resort's picture

Add a little ebola to that upcoming social unrest and the dollar survives for another year.

Fri, 08/15/2014 - 16:37 | 5099580 knukles
knukles's picture

Nothin' like a good distraction

Fri, 08/15/2014 - 15:57 | 5099338 slightlyskeptical
slightlyskeptical's picture

Looks like the same kind of decline as last year. Except it isn't even a decline. It is just slower growth.

 

Fri, 08/15/2014 - 16:12 | 5099431 flying dutchmen
flying dutchmen's picture

BULLISH-- They are conserving energy and running operations way more effiencently..

 

 

Fri, 08/15/2014 - 16:15 | 5099445 yogibear
yogibear's picture

It's going down, no amout of money printing saves this bloated mess.

Fri, 08/15/2014 - 16:47 | 5099637 photonsoflight
photonsoflight's picture

HMMMM let's see what the feds say, (bush's fault, weather, tidal wave, airport kiosks, automation, racism! That's the one. Its racism plain and simple.)

Fri, 08/15/2014 - 17:10 | 5099664 NeverForgetSilver
NeverForgetSilver's picture

How are you guys reading the chart? It is the growth of power consumption down not the total consumption down. It is impossible for power consumption to drop 20% there. As I know of, the power is still tight. People are encouraged to save electricity, unlike the West.

What can I say? I wish people read before they react. There are too much media spin.

Last year when I went for a business trip there, I saw many houses with solar panels and solar heaters installed, so more and more people are trying to produce electricity or hot water themselves. It might also cause official power consumption to go down ( or rise less sharply).

Fri, 08/15/2014 - 18:05 | 5099944 NeverForgetSilver
NeverForgetSilver's picture

Are ZHers so easy to be tricked? The author was trying to test your intelligence.  What a disappointment!

Fri, 08/15/2014 - 16:55 | 5099678 darteaus
darteaus's picture

All that saber-rattling in the South China Sea makes sense now:

The old tyrant ploy of starting military action to distract from economic inaction.

Fri, 08/15/2014 - 17:01 | 5099714 NeverForgetSilver
NeverForgetSilver's picture

See my comment above.

Fri, 08/15/2014 - 17:18 | 5099779 darkpool2
darkpool2's picture

I just chatted with friends who returned from Chiina and they commented that July was MUCH cooler than usual..........that would contribute part of the drop.......and maybe snow in the early. Fall forecast.........

Mon, 08/18/2014 - 14:40 | 5109929 Old_Shatterhand
Old_Shatterhand's picture

Private household electricity consumption is up 5.1% yoy. Snow in half of the mentioned areas is a rarity. Since the Party had decreed ages ago that there is no winter south of Yangtze river, there is no central heating south of the Yangtze, so people use their aircons for heating. That in combination with shoddy insulation of apartments drives power consumption south of the Yantgze through the (poorly insulated) roof in winter.

Fri, 08/15/2014 - 17:21 | 5099784 Yen Cross
Yen Cross's picture

      Asia Major,  is in deep trouble... That whole other side of this flat planet is export "Oriented" (pun intended)

Fri, 08/15/2014 - 18:29 | 5100032 Nue
Nue's picture

More proof that GDP and other economic indicators are being fudged in Europe and America. An Export economy collapses only when the Importing economies do.

Fri, 08/15/2014 - 19:48 | 5100331 TeraByte
TeraByte's picture

Power consumption data is consistent with two other indicators. Rich and privileged transfer their wealth in panic to overseas and institutions start selling financial instruments worth of 2.3T to natives. The rice dinner is served.

Mon, 08/18/2014 - 14:34 | 5109898 Old_Shatterhand
Old_Shatterhand's picture

They have done so for many, many years. A bit of a spike is caused by the anti-corruption campaign, the first and only honest attempt to reduce corruption in China in the past 400 years. Investor naivity is an issue in China, no doubt. But the quality of financial products is getting better, as everyone begins to recognize the underlying risks.

Fri, 08/15/2014 - 20:01 | 5100370 pacrim888
pacrim888's picture

Summer was MUCH cooler than last year. people are walking outside at night and not hiding behind their air conditioning. In my factory, we had NO electricity cuts this year. The temperatures did play a factor but a slow down in the economy is surely also a factor.

Mon, 08/18/2014 - 14:30 | 5109861 Old_Shatterhand
Old_Shatterhand's picture

Private household power consumption is up 5.1% year on year. The weather had no visible impact. My factory did have a power cut last week, but that was a matter of grid, not lack of power.

Sat, 08/16/2014 - 05:19 | 5100452 Wild Theories
Wild Theories's picture

As other posters have pointed out, this is a decline in the growth rate of power consumption.

Not a decline in actual power consumption.

 

edited :)

Fri, 08/15/2014 - 21:20 | 5100674 Aussiekiwi
Aussiekiwi's picture

I love Chinese statistics, next month they will be reporting a 30% increase.

Sat, 08/16/2014 - 01:55 | 5101251 NeverForgetSilver
NeverForgetSilver's picture

Good point. I like our stats more. We can look at any number and interpret it whatever the way want.

Fri, 08/15/2014 - 23:13 | 5100971 AdvancingTime
AdvancingTime's picture

The debate continues as to how stable china really is but this is a sign that China is weakenung. Much of the recent growth in China after 2008 came from a massive 6.6 trillion dollar stimulus program that expanded credit and poured massive amounts of money into the system. This money encouraged expansion and construction with little regard as to real demand or need.

Like a plane on autopilot China continued in the direction it had been on and now China finds itself in a credit trap. For years the people of China have had the habit of saving much of what they earn but the low interest rates paid at banks has not rewarded savers. With few investment options much of this money has drifted towards housing and driven housing prices sky high. The economic efficiency of credit is beginning to collapse in China and the unwinding of China’s giant credit spree could be very painful. More in the article below.

http://brucewilds.blogspot.com/2014/03/china-and-great-credit-trap.html

 

Mon, 08/18/2014 - 14:21 | 5109805 Old_Shatterhand
Old_Shatterhand's picture

Guys, whoever your "sources" may be, they have taken you for a ride. The Economic Daily did not carry any write-up of a drop in power-consumption in east China (a region good for 1/3 of Chinese GDP), nor did anybody else. You should verify news of such enormity, else your repute goes straight down the toilet. Power consumption in July in the mentioned areas was up between 5% to 6.2%.

If you look for any double digit drop of power consumption in China, you will find in the increase of power consumption per unit of GDP growth over the years. That one has dropped 2% to 4% every year for quite a while, statistically.

The reason for China stock exchanges lifting is purely, that they are viewed as undervalued by some benighted fund managers, who consider regular, functional stock markets maxed out.

Considering the ongoing rape of shareholders, the Chinese stock markets could not possibly be valued low enough, IMHO.

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