DAILY BASKET OF COMMENTARIES
‘TIS THE SEASON, FOR CHINA BASHING
While the Russian hunting season continues separately, China bashing has increased pari passu with the rise in military tensions in the South China Sea.
So far, the bashing has concentrated on media assassination by a continuous stream of news highlighting the negative or weak side of China – regardless whether it is true or not. This stream of false or biased news is passed from one news media to the other, as in a relay race, so as to ensure it is nonstop.
One mass media organization recently wailed the deepening of China’s economic slowdown describing it as being in the “doldrums”. All this, because industrial output and retail sales were below expectations for July 2016. It attributed the poor showing to the difficulties China is facing in transforming its economy away from pure production. It then went on to name a number of other woeful results including Chinese cinema ticket sales.
The audacity of this reporting, is that the news item contained data that actually reflects a rosy picture, especially when compared to Western economies and the rest of the world.
It listed Chinese industrial growth at 6%, which alas, is approx. 0.1% below forecast. Also, it claims that Chinese retail sales in July were up only 10.2% which is below forecasts, and below June’s actual record growth of 10.6%. No mention is made of the neck-deep doldrums of the US economy with a growth of 1.2% for the second quarter down from a forecast of 2.6%, nor that the US forecast for the full year 2016 is anybody’s guess; anywhere between negative, zero and 1%! Let us not delve into the EU economic figures, they will certainly bring tears to investors’ and fund managers’ eyes.
Combining negative prose with positive figures is akin to a 3-card side-street game. You have to assume, nay believe, that the “mark” or reader is a moron who cannot read numbers or understand their implications. This may actually be the case, as mass media continues to attract a large readership following.
The relay-race baton was then taken up by another mass media outfit, who commenced by lauding China for beginning its long anticipated Bank restructuring action, but then swung a south-paw and alluded that those actions were not enough, and would probably fail.
STILL BETTER THAN OTHERS
No doubt, the Chinese banks are burdened with poor performing loans. They over lent during the double digit growth decades, and bundling this with their relative inexperience in capitalistic ways, they have been less than prudent. However, they remain on substantially firmer terrain than their western brethren. All we need to do is look at the current status of Deutsche Bank, the crème-de-la-crème of the big world banks.
Other media, reported more news which inadvertently contained positive elements. For example, the China Stock market was up 1.61% for Shanghai and 1.16% for Shenzhen, despite the so called negative economic indicators. Still another media reported auto sales in China up by a whopping 26.3%. How much more positive numbers does one need to realize the China is not bankrupt?
The Chinese economy has been on a winning streak for almost two decades and it is still growing, albeit at a slower pace. Nevertheless, its current growth rate is six times greater than that of the US, and is also diversifying into services, which, once completed a few years down the line, should emerge as something akin to a “Grendizer” – a huge entity that can do almost everything.
China’s economic growth resembles a fairy tale, and despite the many wrenches thrown into its cogs over the years, it has survived and continued to rise towards world peaks. The question now is, will the world let it continue to grow, or come up with a bigger wrench?