Source: Wells Fargo Securities, Bloomberg
MSN/CNBC: An under-the-radar way to measure economic growth in China is painting a bleak picture
China's true pace of economic growth is always hard to decipher, but the country's lagging diesel demand could be a sign that the world's second-largest economy is in a much more dire state than official numbers indicate.
Diesel demand in China fell 14% and 19% in March and April, respectively, reaching levels not seen in a decade, according to data compiled by Wells Fargo. Monthly demand has also been falling every month since December 2017, the data shows.
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WNU Editor: China's energy use (gas, diesel, oil, electricity) are one of the metrics that I use to try and understand the state of China's economy. I also use my contacts and friends in China who tell me what is the unofficial data on the Chinese economy. Bottom line .... since the start of this trade war foreign investment has dried up, new projects are on hold, people are being laid off, and servicing municipal and provincial debt levels are becoming a growing concern for Beijing. For the first time in over 35 years there is now a real fear in China that they may soon be facing the prospect of zero and/or minimal growth in the economy. So yes .... the above diesel stats are accurate. Merchandise and goods are not being moved in China, hence the low diesel consumption rates. This is also one of the reasons why oil prices have not exploded with Iran sanctions, the collapse of Venezuelan oil production, and the Libyan civil war. Chinese oil demand has stabilized and in some cases decreased.
Just a heads up. I have a few more posts on China later today. They will be on Huawei. Rare earths. And Beijing telling the Chinese people to prepare for war.
2 comments:
Look at Germany's econ stats, particularly heavy manufacturing. Very poor results and likely Chinese demand has dropped significantly for German made goods.
No doubt Trump is fully aware of the real economy in China just as Reagan was aware of the real economy in Russia being far worse than official stats despite the CIA's misguided intelligence. For Trump he knows he's got a winning hand in the game and he won't cede. The Chinese can take pain for along time so this trade war endures all during Trump's Presidency, ignore press reports on "deals".
Germany is very very different to China. Have you been? I have, many times - to both countries. You must understand that Germany and its people, for obvious reasons, are very different in the role they want to play. This is reflected everywhere in its culture. In China - the culture, society, rules, aspirations are very different. Chinese want to be American. 2-3 cars. They grew up watching Dallas. They were told, promised and indoctrinated that they will overtake the US by 2020. Now the house of cards is falling apart. The date was changed, the most embarrassing sign of all. The housing bubble in China is around the corner. Their spending spree - inspired by the US but not fully understood - was too high, as no one dared to speak up. Many in the tech industry are leaving China. Brain drain. Money drain. The government went full authoritarian, still does. A million Muslims in concentration camps "reeducation camps" in China. Germany is not like China now. It was back then. And the same happened there too. People were promised a shiny hill, Lebensraum/room to expand, a place under the colonial sun.
China is now what Germany was in the 1920-30s. If a major recession happens in China - we must help them and reach out to get over it. Because just like Germans they were told quite a bit of lies. About us all.
But we must stand up for fair rules, trade and otherwise. And we must ensure that our administration gets room to enforce them, but is stopped in those hopefully few places where it goes too far. Because none of us want thato, all we want is fair trade, ideally the money back (trillions stolen), and international waters respected.
The Chinese population want the same, we just need to talk to them more directly. But foreigners cannot speak that easily in China, not on those matters certainly
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