I have been repeatedly saying that the contagion risks should be seen as clear and present danger in spite of the recent hope-based surge from global stock markets.
And in contrast to mainstream expectations, it appears that most recent China’s trade data, aside from other economic figures, reveals of an unfolding substantial deterioration.
From Bloomberg, (bold added)
China’s export growth collapsed and imports and new yuan loans trailed estimates in July, adding to signs the global economy is weakening and raising the odds the government will step up measures to support expansion.
Outbound shipments increased 1 percent from a year earlier and imports rose 4.7 percent, the customs bureau said today in Beijing. New local-currency lending was 540.1 billion yuan ($85 billion), the central bank said, lower than all 30 estimates in a Bloomberg News survey, after 919.8 billion yuan in June…
“Monetary policy easing has to be more aggressive in the remainder of the year,” said Liu Li-Gang, Hong Kong-based head of Greater China economics at Australia & New Zealand Banking Group Ltd. He said there’s a risk of a “hard landing” and the government may lower banks’ reserve requirements as soon as today…
Separate reports showed industrial output growth unexpectedly slowed last month to 9.2 percent from a year earlier and retail sales rose 13.1 percent, trailing analysts’ forecasts…
New yuan lending in July compared with the median estimate of 700 billion yuan in a Bloomberg survey. It was the lowest monthly figure since September 2011. Growth in M2, the broadest measure of money supply, was 13.9 percent last month, compared with the median forecast for a 13.8 percent gain.
The growth in July exports compared with the 8 percent median estimate in a Bloomberg News survey and 11.3 percent in June. Analysts estimated a 7 percent gain in imports after a 6.3 percent increase in June.
The trade surplus was $25.1 billion in July compared with $31.5 billion a year earlier. The median projection was $35.1 billion.
Excluding distortions caused by the timing of the Lunar New Year holiday, it was the worst export growth since 2009. The figures put China further at risk of missing its 10 percent goal of trade expansion for the year. China is still “confident” of achieving the target, Gao Hucheng, a vice commerce minister, said at a briefing today.
As one would note growth of exports, bank lending, industrial output and even retail sales have all exhibited marked declines.
Of course, hardly any mainstream news today has been without the promises of government rescue (“bad news is good news”), the above has been no different. This typifies the proof by assertion fallacy based on Lenin’s famous aphorism on propaganda “A lie told often enough becomes the truth”.
Chart from The Wilder View
Nevertheless with the growth rate of exports by major Asian exporters (China, South Korea and Taiwan) encroaching on the negative zone, we should expect a hefty slowdown in world trade to be transmitted to the global economy. This essentially elevates the risks of a global recession.
Recently China’s Shanghai Index has posted a modest rally. These may yet represent an oversold bounce or a dead cat’s bounce or whose sustainability has to be established.
Be careful out there.
No comments:
Post a Comment