China: economy with reportedly strong numbers
China surprised today with positive economic figures: Industrial production is according to by the National Bureau of Statistics (NBS) rose 0.7% yoy. However, as expected, retail sales fell by -7.1%. This was -11.1% better than expected (-7.1%) after the May data. This corresponds with household savings figures, which increased by 50.0% in the first five months and continued weak home sales (-23.0% yoy and new home projects started at -30.0%). The assets of Chinese households, i.e. home ownership, are declining. But if wealth decreases, less is consumed. If you build less, you need less cement (-17.0%).
Before that, the export and import figures were better than expected. Export increased by almost 17.0%, import by 4.1%.
At the same time, NBS spokesman Fu Linghui said that “reasonable growth” is expected in the second quarter.
Why the current numbers on the economy can’t be right
However, a closer look quickly raises doubts about these figures. Around 300 million people were in lockdown in China in April and May, including the megacity of Shanghai, which accounts for almost 4.0% of China’s GDP and is home to the world’s largest container port. The port is currently operating at 98.0% of its capacity. Jilin and partially Langfang were also in lockdown, all three cities are extremely important for car production and the location of suppliers. The second major port to stand still was Ningbo, the most virtuoso container port in the world.
With the city of Tjianjin, ranked 9th on the list of the world’s largest container ports, another key port was partially in lockdown.
And doubts about these figures on China’s economy are confirmed when you dig deeper. From January to May -13.6% less coal was imported. Also in May, electric power generation fell by -3.3% and electric power consumption by -1.3%.
Truck traffic on China’s roads fell by -23.0% in April and -18.0% in June, according to a report by Goldman Sachs. According to China’s Ministry of Transport, the combined freight volume of trains and trucks was at 90.0% of its normal capacity at the end of May.
In plain language: China has managed to produce more with less energy and to ship those products back and forth around the country with far less effort. This would mean that China has achieved an unprecedented increase in efficiency.
A rogue who thinks otherwise!
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