In this morning's MarketWatch article titled "China exports fall for second month in a row," Grace Zhy, Mark Magnier, and Rose Yu report that year-over-year exports and imports in China fell by 5.5% and 13.8% in August and by 8.3% and 8.1% in July. In other words, China's exports and imports have both declined significantly over the past year. This is consistent with negative GDP growth in China, which was independently confirmed by analyst David Straszheim at Evercore ISI (see China's Economic Growth is Actually Negative").
Zhu, Magnier, and Rose Yu also reported that "Mr. Lou, China's finance minister, also said in the statement that economic growth would remain around 7% for the next four to five years and the stock market correction was nearly finished." Don't you feel better now?
It is beyond absurd that anyone would claim to accurately forecast economic growth for any country four to five years into the future - unless that person was responsible for making up and reporting the numbers. That would certainly ensure a much higher degree of confidence in the reported numbers. Unfortunately, the global economy will be affected by actual not reported GDP growth in China.
Perhaps one day China will understand that markets hate uncertainty and that uncertainty inflates both volatility and risk premiums. Providing accurate, timely, unbiased information would reduce market volatility in China. But what would be the fun in that.
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