China’s growth data may have been manipulated - Rabobank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Oct 19, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Delhi) – Michael Every, Head of Financial Markets Research at Rabobank, suggests that when China’s Q2 GDP printed at 7.0% y-o-y vs. the market consensus of 6.8% there was consternation on the part of many economists; there was also indignation from the Chinese authorities at the suggestion that the data might have been manipulated to ensure they hit the government’s “around 7.0%” growth target.

    Key Quotes

    “The market expectation for China’s Q3 GDP was again 6.8% y-o-y; and yet again the data proved better than expected at 6.9%. For the markets, the Q3 GDP data were therefore taken as upbeat. However, cynics will note that another 7.0% reading might have looked too much like a ‘guided’ number; as such we got the smallest possible reduction that could be seen and still prove more optimistic than the already optimistic market forecasts.”

    “We say “already optimistic” because various different sources strongly suggest that even a 6.8% figure is flattering.”

    “The unofficial Caixin (former HSBC) PMIs stand at a feeble 47.0 for manufacturing and a more worrying 50.5 for services, which doesn’t point to much growth at all; the Li Keqiang index (comprised of electricity, railway cargo, and bank loans) was up just 3.1% y-o-y in August; Bloomberg’s monthly China GDP estimate was 6.6% for August; and imports plunged -17.7% y-o-y in local currency terms in September, which hardly points to dynamic activity even allowing for the fall in commodity prices.”

    “Indeed, look below the surface (or at least as far below the surface as one can presently go with Chinese data) and things look less positive than the “stronger than consensus” number suggests.”
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