Strong movie ticket sales are the hot new metric China bulls are using to show that the country’s economy is moving along at a steady clip.
Nick Lardy of the Peterson Institute for International Economics used movie sales as a metric to bolster his argument that the services sector has become the driving force behind the Chinese economy back in August.
That, Lardy and other bulls maintain, means that the country is achieving its goal of smoothly transitioning its economy from one focused on investment to one focused on consumption.
Kynikos Associates founder — and known China bear — Jim Chanos isn’t buying it.
“In following China, I have learned to be suspicious of any one number that is suddenly trotted-out by Chinese bulls, en masse, to support their case,” he told Business Insider via email.
“Lately it has been Chinese movie box office figures, which have been strong, proving that the Chinese consumer is still spending freely.”
A slew of Chinese economic data released last week, however, paints a different picture. The old drivers of China’s economy — like industrial output and housing starts — predictably fell, which jibes with Lardy’s thesis. What didn’t jibe, though, was the mix of consumption data.
“The official data show consumption remarkably resilient to slowing income growth and a blow to confidence from the collapsing equity market. Not all the independent data agree. Indexes of spending at restaurants and luxury hotels from UnionPay Advisors suggest consumption in those sectors is flat or falling,” wrote Bloomberg economist Tom Orlik last week.
So we have a hot debate on our hands. If Orlik (and Chanos) are correct, the sector that is supposed to be saving China isn’t as strong as the bulls think. That’s why Chanos decided to go beyond the cinema and look at other parts of China’s services sector.
“After asking my staff to examine this further,” Chanos said, “it became apparent why movie ticket sales were being touted-they appear to be the ONLY area showing any real year-year growth! Data mining is alive and well, even in China.”
The chart below plots the sales of a number of consumer products, including movie ticket sales.
And here’s the table with all the data:
And here’s a table with a bunch of things you might need to enjoy the movies — before, during or after.
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