China malaise

Posted: August 11, 2015 in Uncategorized

The Chinese malaise run deeply in its own power.

The same power that can avoid a market crash in reality hinders via corruption and fake data the growth of a really strong China.

China GDP growth is stated at 7%. Real research houses like Lombard Street Research, Capital Economics and others estimated the real GDP to be somewhere between 3.8% and 4.9%.

Much more in line with the real data (railway freight -9.9% yoy and electricity consumption -2.2% yoy).

The Politburo decided the easy step and do the same as the Western countries. Massive market intervention to make feel the consumer happy and spur consumption.

The issue is that only 9% of Chinese invests in the market.

What they should have done is to tackle healthcare/ superannuation. Chinese are savers not because they like it, but because there is no Government assistance in these sectors…so they need to save for rainy days.

Still China has enough cash reserves and a strong enough security apparatus to survive (and a 3.8% growth is not bad at all). Only just forget the old days.

The biggest issue is actually the China dependent countries like Australia – which do not have the great cash reserves they have  or smart and all powerful (select which you prefer) politicians.

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