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China's GDP Falls Short of Expectations: The Reality Behind the Numbers #shorts
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China GDP came out at a good sounding, despite being below market expectations, annual growth rate of 6.3%.
Market had been hoping for 7.3%, but this is just a failure in understanding of the long term shift that has already occurred in the China economy.
The China economic miracle is done. It is out of the box. Achieved. Now the China objective is maintaining sustained robust economic performance, rather than shooting for the moon. Though its space agency is doing that.
The 6.3% is not the current reality of China’s economic state either. The economy is actually likely performing at a more modest 4.6% level.
My forecast since covid has always been that China would settle into a one to three decade growth trajectory of 2% to 5.5%. A 6 may be seen on occasion, but it is not really where the world’s second largest economy will be comfortable going forward.
To get a look see at the real economic pace of the moment, you really need to step outside the base distortion effects of lockdowns and examine the quarter on quarter growth rates. Q1 2.2% The latest Q2 growth rate just 0.8%. Some slowing was understood and anticipated post the post-lockdown boom.
My estimate of where the China economy is truly travelling at the moment is approximately 4.8%, or a little lower. A significant slowing, but not falling off a cliff either. It is taking data series around the world quite a while to stabilise post pandemic upheavals and volatility.
Remember, all such data are only mere survey estimates. Hence the volatility in all economic data series around the world even in normal times. Often people make the mistake of thinking such data releases accurately reflect the real world. They are a guide at best, and a volatile one at that. They are not the real world.
It is entirely reasonable, though not quite of the hype in either direction some would have us believe, that China is growing in the mid to high-4s at the moment.
The ramifications for the rest of the world, particularly commodity producers means continuing wealth building opportunities but no more free ride. Exporters to China and investors alike, will need to work harder to do well there and maintain market share.
For China, it is going to be a case of moderate policy moving forward in what is really a best of both worlds scenario of domestic and external growth paths.
There are certainly problems to address. These include property market vulnerabilities, high youth un-employment and indebted local governments. None of these are a quick fix, but these imbalances will be worked through naturally with time as is typical of all major economies. They will require significant attention, but in a more nuanced manner than the provision of instant solutions.
China has more work to do, as we all do, but where the economy is at right now remains a big positive for the rest of the world too.
Just not the same backstop to the global economic growth outlook it was in recent decades.
Get in touch today:
#acysecurities #chinaeconomy #economicnews #audusd #usd #gdp
@ACYSecuritiesAustralia
Foreign exchange and derivatives trading carries significant risk and is not suitable for all investors. You do not own, or have any interest in, the underlying assets.
Before you decide to trade foreign exchange and derivatives, we encourage you to consider your investment objectives, your risk tolerance and trading experience.
ACY Securities Pty Ltd (AFSL: 403863) provides general advice that does not consider your objectives, financial situation or needs. You should consider if you are part of our Target Market by reviewing our TMD and read our FSG and PDS to ensure you fully understand the risks. The content of this presentation must not be construed as personal advice and the information in this presentation is prepared without considering your objectives, financial situation or needs; please seek advice from an independent financial or tax advisor if you have any questions.
ACY Securities Pty Ltd is regulated by the Australian Securities and Investments Commission (ASIC AFSL:403863). Registered address: ACY Tower, Level 18, 799 Pacific Hwy, Chatswood NSW 2067. AFSL authorised us to provide financial services to Australian Residents or Businesses.
ACY Capital Australia LLC ('ACY LLC'), ACY LLC is incorporated in St Vincent and the Grenadines (Company number: 2610 LLC 2022). Registered address: Suite 305, Griffith Corporate Centre, Beachmont, Kingstown.
© 2018 - 2023 ACY Securities is a brand name of ACY AU and ACY LLC, ACY Securities Pty Ltd. All rights Reserved.
Market had been hoping for 7.3%, but this is just a failure in understanding of the long term shift that has already occurred in the China economy.
The China economic miracle is done. It is out of the box. Achieved. Now the China objective is maintaining sustained robust economic performance, rather than shooting for the moon. Though its space agency is doing that.
The 6.3% is not the current reality of China’s economic state either. The economy is actually likely performing at a more modest 4.6% level.
My forecast since covid has always been that China would settle into a one to three decade growth trajectory of 2% to 5.5%. A 6 may be seen on occasion, but it is not really where the world’s second largest economy will be comfortable going forward.
To get a look see at the real economic pace of the moment, you really need to step outside the base distortion effects of lockdowns and examine the quarter on quarter growth rates. Q1 2.2% The latest Q2 growth rate just 0.8%. Some slowing was understood and anticipated post the post-lockdown boom.
My estimate of where the China economy is truly travelling at the moment is approximately 4.8%, or a little lower. A significant slowing, but not falling off a cliff either. It is taking data series around the world quite a while to stabilise post pandemic upheavals and volatility.
Remember, all such data are only mere survey estimates. Hence the volatility in all economic data series around the world even in normal times. Often people make the mistake of thinking such data releases accurately reflect the real world. They are a guide at best, and a volatile one at that. They are not the real world.
It is entirely reasonable, though not quite of the hype in either direction some would have us believe, that China is growing in the mid to high-4s at the moment.
The ramifications for the rest of the world, particularly commodity producers means continuing wealth building opportunities but no more free ride. Exporters to China and investors alike, will need to work harder to do well there and maintain market share.
For China, it is going to be a case of moderate policy moving forward in what is really a best of both worlds scenario of domestic and external growth paths.
There are certainly problems to address. These include property market vulnerabilities, high youth un-employment and indebted local governments. None of these are a quick fix, but these imbalances will be worked through naturally with time as is typical of all major economies. They will require significant attention, but in a more nuanced manner than the provision of instant solutions.
China has more work to do, as we all do, but where the economy is at right now remains a big positive for the rest of the world too.
Just not the same backstop to the global economic growth outlook it was in recent decades.
Get in touch today:
#acysecurities #chinaeconomy #economicnews #audusd #usd #gdp
@ACYSecuritiesAustralia
Foreign exchange and derivatives trading carries significant risk and is not suitable for all investors. You do not own, or have any interest in, the underlying assets.
Before you decide to trade foreign exchange and derivatives, we encourage you to consider your investment objectives, your risk tolerance and trading experience.
ACY Securities Pty Ltd (AFSL: 403863) provides general advice that does not consider your objectives, financial situation or needs. You should consider if you are part of our Target Market by reviewing our TMD and read our FSG and PDS to ensure you fully understand the risks. The content of this presentation must not be construed as personal advice and the information in this presentation is prepared without considering your objectives, financial situation or needs; please seek advice from an independent financial or tax advisor if you have any questions.
ACY Securities Pty Ltd is regulated by the Australian Securities and Investments Commission (ASIC AFSL:403863). Registered address: ACY Tower, Level 18, 799 Pacific Hwy, Chatswood NSW 2067. AFSL authorised us to provide financial services to Australian Residents or Businesses.
ACY Capital Australia LLC ('ACY LLC'), ACY LLC is incorporated in St Vincent and the Grenadines (Company number: 2610 LLC 2022). Registered address: Suite 305, Griffith Corporate Centre, Beachmont, Kingstown.
© 2018 - 2023 ACY Securities is a brand name of ACY AU and ACY LLC, ACY Securities Pty Ltd. All rights Reserved.
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