While it will hardly come as a surprise to anyone following China’s dismal attempts at reflating the economy, which on Monday we learned translated into the lowest Aggregate Financing print since the series was established…
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Source: Bloomberg
… reaffirming Beijing’s impotence at stimulating the all-important credit impulse which is barely above cycle lows…
STATE OF PLAY: Highly watched Hong race remains too close to call as progressives notch key primary wins
Ilhan Omar on track for fifth term as Minnesota voters maintain far-left streak
Trump-backed Mike Lindell falls to Lisa Demuth in Minnesota governor primary
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Trump’s ‘firewall’ against socialism in battleground state punches ticket to election
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Source: Bloomberg
… tonight’s macro data dump from China is expected to show continued slowing from Q3’s disappointing GDP print.
Bloomberg Economics’ Chang Shu notes that the October activity data are likely to show weakness continuing to spread across China’s economy, as companies adjusted to an additional 15% U.S. tariffs on $110 billion of Chinese goods in September.
- China Industrial Production MEET +5.6% YoY vs +5.6% YoY Exp
- China Retail Sales MISS +7.2% YoY vs +7.8% Exp
- China Fixed Asset Investment MISS +5.2% YoY vs +5.4% Exp.
- China Property Investment FELL to +10.3% YoY from +10.5% YoY
- China Surveyed Jobless Rate FELL to 5.1% from 5.2%
STATE OF PLAY: Highly watched Hong race remains too close to call as progressives notch key primary wins
Ilhan Omar on track for fifth term as Minnesota voters maintain far-left streak
Trump-backed Mike Lindell falls to Lisa Demuth in Minnesota governor primary
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This is the equal weakest retail sales growth since 2003 and weakest Fixed-Asset Investment growth since 1998..
Source: Bloomberg
This data confirms that China’s economy slowed further in October, signaling, as Bloomberg’s Miao Han notes, that policy makers’ piecemeal stimulus is failing to boost output and investment amid ongoing trade tensions with the U.S. and subdued domestic demand.
As a reminder, there was the surprising divergence in the two manufacturing PMI readings, with the “official” version weakening, and the Caixin-labeled version strengthening.
STATE OF PLAY: Highly watched Hong race remains too close to call as progressives notch key primary wins
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4-year-old dies after suffering electrical shock from clothes dryer inside Kansas home
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Watch: Rules Confusion Leads to 16-Minute Delay in MLB Game as Red Sox Accidentally Score a Run
Fauci’s Pardon Neutralized? Florida Issues Subpoena, Begins Investigation Into Self-Dealing, Which Fauci’s Pardon Does Not Cover
Watch: Virginia Gov. Abigail Spanberger Drowned Out by Boos and Jeers When She Tries to Speak at Rural Event
Trump looms over blue state primary as progressive gov faces far-left challenge
Darline Graham Nordone, Ralph Norman advance to runoff in Senate race to replace Lindsey Graham
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Source: Bloomberg
Dow futures are exuberantly surging overnight as yuan continues to slide – disagreeing vehemently over the chances of a US-China trade deal after their joint celebrations last week…
Source: Bloomberg
Finally, as we just noted, The National Institution for Finance and Development (NIFD) on Wednesday said that China’s economic growth rate will slow to 5.8% in 2020 from an estimated 6.1% this year, a number which is already quite ambitious, not to say artificially goalseeked.
STATE OF PLAY: Highly watched Hong race remains too close to call as progressives notch key primary wins
Ilhan Omar on track for fifth term as Minnesota voters maintain far-left streak
Trump-backed Mike Lindell falls to Lisa Demuth in Minnesota governor primary
4-year-old dies after suffering electrical shock from clothes dryer inside Kansas home
Trump’s ‘firewall’ against socialism in battleground state punches ticket to election
Pure Evil: 3 Charged in Water, Burning Torture and Murder of Boy, 7 – Multiple Suspects Are Trans
Watch: Rules Confusion Leads to 16-Minute Delay in MLB Game as Red Sox Accidentally Score a Run
Fauci’s Pardon Neutralized? Florida Issues Subpoena, Begins Investigation Into Self-Dealing, Which Fauci’s Pardon Does Not Cover
Watch: Virginia Gov. Abigail Spanberger Drowned Out by Boos and Jeers When She Tries to Speak at Rural Event
Trump looms over blue state primary as progressive gov faces far-left challenge
Darline Graham Nordone, Ralph Norman advance to runoff in Senate race to replace Lindsey Graham
Georgia teacher, father hailed as hero after dying to save girl from Myrtle Beach rip current
Watch: Trump’s NIH Director Jay Bhattacharya Unloads on Fauci Over Texts Showing He Thought One Thing, But Said Another to American Mothers
Zuckerberg Superyacht Accused of Ignoring Vessel’s Call for Help – Alaskan Cruise Captain Comes to the Rescue
Trump directs CMS Administrator Mehmet Oz to end Medicaid gender transition funding for minors
This, as the SCMP notes, is at the bottom end of China’s target range of 6 to 6.5% growth for 2019, and further indicates the continued downward pressure on the economy from the trade war with the United States as well as domestic headwinds.
“The economic slowdown is already a trend,” said former central bank adviser Li Yang, who heads the institute that is affiliated to the Chinese Academy of Social Sciences (CASS).
“We must resort to deepened supply-side structural reform to change it or smooth the slowdown, rather than solely rely on monetary or fiscal stimulus.”
The institute’s forecast is in line with the International Monetary Fund, and indicates the challenge that policymakers face to achieve the above 6% growth rate needed in 2019 and 2020 to reach the government’s goal of doubling GDP in 2020 compared to its 2010 level.
As a reminder, a GDP growth rate below 6% would be the first time since the aftermath of the 1989 Tiananmen crackdown.
Finally, we note that Navarro and his trade hawks in the White House will be pleased at these weak numbers. President Trump has repeatedly said that China needs a deal more than the U.S. does, and these numbers as leverage in their negotiations.
Story cited here.
