(CN) Officials in a number of cities/provinces said to also “overstating economic output, corporate revenue, corporate profits and tax receipts.”
How to interpret these headlines?
Market has long been expecting a “hard landing” in Chinese economy and that sentiment has intensified during the last 8 months as economic indicators in China started to show signs of contraction… However, because of the steady and consistent nature of these gradual slowdowns, analysts have been softening their worse expectations and considered that perhaps China economic slowdown will be a mild one, or a “soft landing”.
If these reports were true, with government officials falsifying figures, we could see another round of risk aversion sellings as traders lose confidence in the market, and we should see continous demand in both USD and JPY, while AUD gets sold off, as China is Australia’s largest trade partners.
Of course, it will be hard to ascertain what the real economy is at in China, but with the Chinese government pulling out all stops and potentially cutting the RRR again in the coming weeks, market could shift its focus away from this issue, although as long-term fundamental analysts we should keep in mind that the China story might not end well.
China Economic Slowdown – It’s Worse Than You Know…
June 25, 2012 by 1 Comment