Patrick Chovanec, a professor at Tsinghua University (and well-known blogger) was on BloombergTV last night, talking about a ‘disconnect’ between official economic numbers out of China and what he’s seeing on the ground.You can watch the video below, but we’ve taken notes, and the gist is that inflation is much hotter, and growth is much slower than what any official numbers say.
GDP could in reality only be growing by 4-4.5%, well below official targets of over 7%.
— There’s a big disconnect between official data and other data.
— My milk bill shows much bigger inflation than official numbers.
— Real estate numbers that are vibrant officially do not much what’s happening on the ground.
— When I talk to companies throughout China, there isn’t a single one that’s seeing an increase in profits or revenues.
— Everyone who isn’t completely delusional is looking at downside risk.
— Most of the people I talk to see a flat year, and they’re struggling to see a flat year.
— In real estate, national numbers are showing an increase in 30% year on year (in investment). Local numbers are negative, however.
— China is perhaps experiencing a “contraction.”
— When we talk about a hard landing, GDP could be around 4-4.5%.
— Let me give you an example of people not believing numbers. Over the last few years, Chinese banks have been reporting record earnings. But if you look at trading in Chinese banks, it’s simply not reflected.