China's Economic Numbers Look Pretty Bad
The high economic cost of coronavirus.
Amid a widespread shutdown of manufacturing operations, industrial production – a measure of manufacturing, mining and utilities activity – declined by 13.5 per cent over the first two months of the year, combined data for January and February showed.
This was the first decline on record, although ordinarily the data is released monthly. But the numbers were well below expectations of a 3.0 per cent decline.
Retail sales, a key metric of consumption in the world’s second largest economy, fell by 20.5 per cent, again the first decline on record. This was well below the median forecast of a group of analysts, conducted by Bloomberg, which predicted a 4.0 per cent contraction.
Fixed asset investment – a gauge of expenditure on items including infrastructure, property, machinery and equipment – collapsed by 24.5 per cent, much worse than analysts’ predictions of minus 2.0 per cent. This was the first shrinkage on record.
The problem with the projections is that they depend on the PRC being accurate and honest about the impact of the coronavirus, and there's no reason to believe that it is.
During his campaign, Bloomberg prioritized protecting his access to China, because a chunk of his business depends on it, by not offending the PRC. That's a common problem.
These numbers would potentially suggest that the real world impact of the Wuhan Flu on the PRC is worse than it has admitted.