China Delivers "Surprisingly" Great Economic Data Across The Board, Yuan Yawns

Following more dismal data from the US, hope for global growth remains in China and they did not disappoint. Despite slumping macro data, a major slowdown in real estate, and the nation's deleveraging efforts in the last three months, GDP beat, Retail Sales beat, Industrial Production surged, and even fixed asset investment was above expectations. The Yuan hasn't moved.

For the last three months, Chinese data has been disappointing, along with US, as the collapsing credit impulse leaks into reality...

But exports and consumer spending have been pillars for the economy over the second quarter, offsetting the curb on leverage, and tonight's data shows that none of that matters.. because the deleveraging economy beat across the board

  • China GDP BEAT 6.9% (exp +6.8%, prior +6.9%)
  • China Retail Sales BEAT 11.0% (exp +10.6%, prior +10.7%)
  • China Fixed Asset Investment BEAT 8.6% (exp +8.5%, prior +8.6%)
  • China Industrial Production BEAT 7.6% (exp +6.5%, prior +6.5%)

As the charts below show, more of the same well-managed data to show that all is well enough that hope remains...Strong growth again reflects an economy awash in credit, foretold in the latest new yuan loans (1.54 trillion yuan) and aggregate social financing (1.78 trillion yuan).

Enda Curran, Bloomberg's Chief Asia Economics Correspondent, notes that at first glance there's not a lot for the bears in these numbers given they appear strong across the board. The backdrop though continues to be one of cheap credit and mounting risks. That's an issue policy makers say they are aware of but for now, it seems like growth above all else is key.

Iris Pang, greater China economist at ING Bank in Hong Kong:

"Higher than expected GDP growth comes from strong industrial production. That said, the gap between FAI growth and industrial production growth tells the story that it is consumption and export driven growth."

Julian Evans-Pritchard, China economist at Capital Economics, said the strength seen in the data seems unlikely to last:

"The recent crackdown on financial risks has driven a slowdown in credit growth, which will weigh on the economy during the second half of this year.

 

"What’s more, the National Financial Work Conference that concluded over the weekend has signaled that further regulatory tightening remains on the horizon."

We wonder how long before the lagged response to the credit impulse collapse hits GDP... (NOTE the weaker and weaker reactions in GDP to credit impulse surges)

 

The reaction in Yuan is underwhelming for now... (after its biggest weekly gain since March)

 

China's stock market ripped back higher (after an early plunge) ahead of China's data dump, and held those gains as the data hit (we wonder if someone got wind of the data a little early?).

As a reminder, Japan is closed for a holiday so we are not getting the usual juice from BoJ shenanigans on any move.

Comments

GUS100CORRINA yomutti2 Sun, 07/16/2017 - 22:27 Permalink

China Delivers "Surprisingly" Great Economic Data Across The Board, Yuan YawnsMy response: When I see headlines like the one above, I get more confused everyday.We see data on GHOST CITIES, GHOST INVENTORY, SHADOW BANKING ISSUES, RISING CREDIT DEFAULTS, etc. and yet the CHINESE economy is growing at over 6%. Sorry, but I am really confused and get the feeling that TRUTH is being stretched a bit in both directions.

In reply to by yomutti2

Doctor of Reality Sun, 07/16/2017 - 22:14 Permalink

When you control reality, the "news" becomes whatever you want it to become. Anything out of China should be viewed with a grain of salt. Now, the US media... they're to be trusted 100%.  s/

Hongcha Doctor of Reality Mon, 07/17/2017 - 01:13 Permalink

Yes.  Unless you are able to travel abroad, a privilege reserved for about .1% of the population of China, then your mind is programmed from birth by a mind-numbing cavalcade of lies, non-stop.  It's truly a breathtaking slave state, perfect in its own way and great to invest in because the PRC can write its own reality ticket and the very great majority does not even have the data or perspective necessary to compare, still less to doubt what you say.I remember my first visit to the mainland; Beijing 2002.  The day I arrived was the 50th anniversary of the Korean War.  The West's version of the war differed, shall we say, from the party line so the PRC simply pulled the plug on all the Western media pipelines.  If you were channel-surfing you would find 7-8 identical test patterns where BBC, CNN, CNBC etc. were yestereday and would be tomorrow.And the China media censoring is much, much more seamless and subtle now.

In reply to by Doctor of Reality

fattail Hongcha Mon, 07/17/2017 - 07:08 Permalink

And the China media censoring is much, much more seamless and subtle now.  Mr. Zuckerberg and Mr. Brin were only to happy to violate a bunch of third world peasants basic human rights of access to information and free expression.Whenever someone from silicon valley starts pontificating on their moral superiority, its always nice to remember that they have no moral core and are sellouts of the highest order.

In reply to by Hongcha

bogdan11 Sun, 07/16/2017 - 22:31 Permalink

Only a 0.1% beat on GDP from the surprising great economic data ? Sorry but the numbers don't add up. Maybe they should ''seasonally adjust'' more that GDP number to mach the other ''surprisingly good'' numbers.

VW Nerd Sun, 07/16/2017 - 22:33 Permalink

Trump's trade embargos and exchange controls are working great!  China, India and Africa make up something like 2/3 of the world's consumers.  All have growing GDP.   Xi is probably smiling...

DaveA Mon, 07/17/2017 - 00:56 Permalink

Remember, China has factory prisons to employ thieves, drug dealers, and governors who don't report at least 7% annual growth. So far, no province has ever failed to achieve 7% growth!

Iskiab Mon, 07/17/2017 - 06:48 Permalink

I don't think people realize how culturally different China is to the west.

I knew someone who worked at Nokia in their finance department. Their boss got her to lie on the financial reports and overstate earnings. At first it was a little, but as the reality wasn't pleasant, they just kept on reporting positive numbers. By the end the reports were double reality.

Nokia at the time wasn't doing well except in China. It ended when they got purchased, and the news never got out.

My point is in Chinese culture, if people expect good news, or if good news is good for your boss, you will get good news. You have to take that into account with any numbers out of China, and I wouldn't trust any numbers unless you audit them yourself.

DelusionsCrowded Mon, 07/17/2017 - 09:48 Permalink

In maybe not surprising if the money that has been exiting China is now forced to make value inside the country through investment . With an extremely well educated workforce young entrepreneurs and capital an the new moon shot .