Tuesday, May 5, 2015

A rantette about China-related data

 - by New Deal democrat

It's getting hard to find Doomer dataporn.  Maybe that's a contrarian sign?  Even the DK Doomers have moved on from the economy to other reasons by we are going to hell in a handbasket. There's ZH of course, but that is mainly C-level stuff.  Mish is still capable of taking a deep dive into the numbers, and is worthwhile.  Then there is Naked Capitalism, which twice a day posts thorough linkfests that usually have one or two items of good info.

This morning NC's linkfest led me to an article about how Chinese shipping data shows were all DOOOMED.   That in turn led me to the HSBC Chinese factory PMI, which the latest clickbait at Business Insider telling me is in contraction, and at a one year low.  OMG!!!

Except when I go find a longer term graph of the HCBC Chinese PMI, here's what it shows:

Apparently Chinese manufacturing has been in a state of contraction, with respites of mediocre expansion, ever since 2011!  Pretty amazing for the secularly fastest-growing economy on the planet.

That doesn't mean the index is useless.  Its upward and downward moves might well correlate with faster or slower rates of expansion.  If we add, say, +5 to every reading, then we might actually start getting concerned if it drops below 45.

But this is why I put very little faith in any number attempting to describe China, especially if it has to rely on the accuracy of domestic Chinese data.  Someday out there China is going to go into an actual recession, but the CCP has far too much at stake than to allow poor data to be accurately reported.  Which is why I generally treat data about the Chinese economy as emanating from a block box. In a darkened room.  In the dead of night.  At the time of a new moon.