“Alarming” Chinese Beige Book Reveals Dire Economic Situation, Fewest Profitable Companies On Record
by Tyler Durden
ZeroHedge.com
12/18/2015
It’s notoriously difficult to get a read on the health of China’s economy.
The ambiguity is in large part attributable to the NBR’s tendency to goalseek the data in order to ensure that growth remains in line with the Party’s “targets.” To be sure, virtually no one believes the official numbers and when it comes to GDP, the situation is complicated by what we’ve called Beijing’s deficient deflator math, which causes China to habitually overstate economic growth during times of rapidly falling commodity prices.
Although sellside estimates are useless (the Street is effectively forced to produce forecasts they know are erroneous because trying to estimate actual output in China would mean missing the “official” mark every single time) we can get a decent approximation of how the country is really doing by looking at the Li Keqiang index, which tracks electricity consumption, rail cargo, and loans.
Another way to assess the health (or lack thereof) of the world’s engine of global growth and trade is the CBB, or, China Beige Book which is modeled on the Fed’s survey of the U.S. economy. According to the CBB, the Chinese economy deteriorated markedly in Q4 and the weakness was broad-based.
Despite the fact that “official data on industrial production, retail sales and fixed-asset investment all exceeded forecasts for November, while consumer inflation perked up and a slide in imports moderated,” the CBB suggests “national sales revenue, volumes, output, prices, profits, hiring, borrowing, and capital expenditure were all weaker than the prior three months,” Bloomberg reports.
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