Talk about hitting your marks!
Second quarter GDP grew in China at a 6.9% year over year rate, Beijing reported over the weekend. The consensus projection called for 6.8% growth. In the first quarter China’s GDP grew at 6.9% year over year.
In June Fixed Asset Investment climbed 8.6% year over year versus an expected 8.5% and an 8.6% rate reported in May. Industrial production in June climbed 7.6% against consensus expectations for 6.5% and May’s 6.5% rate. Retail sales for June were up 11.0% year over year against expectations for a 10.6% year over year rate of growth and May’s 10.7% rate.
These are the kind of numbers that China’s government statisticians typically churn out in the run up to the party congress to be held this fall that will award President Xi Jinping with a second five-year term as “core leader.” Nothing is allowed to potentially rock the boat as the country’s leaders head into that exercise. The economic data is of a piece with other recent don’t rock the boat” events recently that include the banning of Pooh from the Internet in China after illustrations casting Xi as Pooh in contrast to a taller President Obama as Tigger raised official ire and the suspension from office in Chongqing of rising star Sun Zhengcai, the youngest member of the Politburo, while the party investigates charges that he violated party regulations.
Do lots of analysts and economists on Wall Street have suspicions that the economic numbers are cooked? Absolutely. Does it matter in the short run? Absolutely not. The narrative of a global economic recovery with good times for emerging markets has too many adherents who are making too much money for a contra-narrative to gain much momentum. Which doesn’t mean that a counter-narrative that emphasizes the huge bad debt problem in the Chinese financial system, the country’s looming demographic crisis, and the continued dependence of the Chinese economy on wasteful infrastructure spending isn’t true.