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Thursday, July 16, 2020

China Q2 GDP growth was 3.2%! How real was it?

https://www.scmp.com/economy/china-economy/article/3093371/china-gdp-economy-avoids-recession-second-quarter-growth-32

China expanded 3.2% in Q2 2020 which showed great economic resiliency.


We had earlier projected in Feb 2020 that China Q2 would be worse than Q1 and we were wrong because we belittled the communist's power in boosting its economic growth and containing the virus outbreak.  Therefore, we are providing an update now since there was no update after Feb 2020.

http://sg-stock.blogspot.com/2020/02/china-can-stabilize-its-stock-markets_21.html

http://sg-stock.blogspot.com/2020/02/china-can-stabilize-its-stock-markets_17.html

After our postings in Feb 2020, China had managed to contain the COVID outbreak and boost its economic growth with stimulative policies.  This is the advantage of a communist country because it can channel and divert all the resources to develop its country without any reservation.

How real is China GDP growth?  Is the GDP growth of 3.2% a fudged number?

Well, the GDP number doesn't necessarily reflect economic reality as shown below.

http://sg-stock.blogspot.com/2019/11/the-latest-us-gdp-growth-is-not.html

Therefore, we will analyze other economic variables to ascertain the veracity of the GDP growth.

China PMI

China PMIs had been in an expansionary mode from April to June 2020.  How is PMI related to GDP?  Please see our posting below.

http://sg-stock.blogspot.com/2019/04/the-us-economy-has-flipped-and-fissures.html

China retail sales
China retail sales had been rebounding from its doldrum of -20.5 in Jan to -1.8 in June 2020.

China Import

China Export

In conclusion, the other economic variables (PMI, retail sales, import & export) had improved in Q2 which indicated that the Q2 GDP growth in China was real.

2 comments:

Eric Ho said...

https://sg.finance.yahoo.com/news/chinas-june-property-investment-accelerates-045713923.html

China property market is doing well too.

Eric Ho said...

China retail sales were rebounding without free monies given by the government compared to the free US$600 weekly cheques doled out by the US government.

Therefore, China has more avenues to boost is consumption.