What’s going on?
The latest Chinese economic data was underwhelming, so the government may need to stay late to work on a better solution.
What does this mean?
China’s economy is used to making the world jealous: the country overtook Italy, France, the UK, Germany and Japan’s economies between 2000 and 2010, and it’s held the silver spot behind the US ever since. So it’s understandable that after building up quite the reputation, the Chinese government is less than delighted about the economy’s current pause. November’s data showed that the manufacturing sector was even quieter than the month before, as tentative shoppers – conscious of the economy’s shaky ground – held back from ordering anything they didn’t actually need. And with the services sector also clocking in lower-than-expected numbers, the government may need to bring in more drastic measures to avoid being left red-faced on the world stage.
Why should I care?
For markets: If you can’t beat ‘em, deny ‘em.
China might not have solved its economic problems, but it can do the second-best thing: pretend they don’t exist. China International Capital – one of the country’s biggest investment banks – has warned its analysts against publishing negative outlooks for the Chinese economy. The bank’s workers have apparently also been asked not to flash their luxury lifestyles, rendering those logo-heavy sunglasses useless without the chance to grace social media.
The bigger picture: An Apple a day…
When China sneezes, you’d expect the rest of the world to catch a cold. But ditch the vitamin C: the US stock market seems immune so far. That’s partly because industrial and commodity firms that are most affected by the state of global economies only make up a small part of key indexes like the S&P 500 these days. But even big names that count China as a major market, like Apple, have held steady, mainly because the country’s wobble seems to be already accounted for in share prices.
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Originally Posted November 30, 2023 – C For Effort
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