Tuesday, 05 January 2010 05:00

Goldman Seems to Trust the Chinese Economic Reporting a Tad Bit More Than I Do!

From CNBC: China GDP Likely Grew by 13% in December: O'Neill

China's economy likely grew by 13 percent in the last month of 2009 and market fears that the country is manipulating the data are exaggerated, Goldman Sachs' Jim O'Neill told CNBC...

"I think there are valid concerns out there with regards to economic data in China," Clive McDonnell, a regional strategist at BNP Paribas Securities, said.

"One is the issue of inflation. China releases its monthly inflation data before the end of the month, and that does raise a bit of skepticism there," he said, pointing out also that although the country reports car sales rises in the double digits, gasoline sales increase by only 2 to 3 percent. Hey buddy, haven't you heard that cars are getting more and more efficient these days. Did you fail to consider the possibility of 2 million Prius's being sold to the Chinese??? Huh! :-)

O'Neill said fears of asset bubbles in China because of the country's rapid growth and lax fiscal and monetary conditions are "completely overblown." He also pointed out that the Chinese stock market has not made a new high since August. I'm at a loss as to how anyone can fail to consider the potential for a real estate asset bubble in China. Maybe I'm just paranoid...

"Market fears that the country is manipulating the data are exaggerated". Wait a minute! Isn't this the same nation that killed an untold amount of people for attempting to exercise the obviously "alienable" right of free speech and right to gather in public places???

From Wikipedia: Tiananmen Square protests of 1989

The Tiananmen Square protests of 1989, referred to in most of the world as the Tiananmen Square massacre and in the People's Republic of China (PRC) as the June Fourth Incident (officially to avoid confusion with two prior Tiananmen Square protests), were a series of demonstrations in and near Tiananmen Square in Beijing in the PRC beginning on 14 April 1989. Led mainly by students and intellectuals, the protests occurred in a year that saw the collapse of a number of communist governments around the world.

The protests were sparked by the death of a pro-democracy and anti-corruption official, Hu Yaobang, whom protesters wanted to mourn. By the eve of Hu's funeral, 100,000 people had gathered at Tiananmen square.[1] The protests lacked a unified cause or leadership; participants included disillusioned Communist Party of China members and Trotskyists as well as free market reformers, who were generally against the government's authoritarianism and voiced calls for economic change[2][3] and democratic reform[3] within the structure of the government. The demonstrations centered on Tiananmen Square, in Beijing, but large-scale protests also occurred in cities throughout China, including Shanghai, which remained peaceful throughout the protests.

The movement lasted seven weeks, from Hu's death on 15 April until tanks cleared Tiananmen Square on 4 June. In Beijing, the resulting military response to the protesters by the PRC government left many civilians and military personnel charged with clearing the square of the dead or severely injured. The number of deaths is not known and many different estimates exist.[4][5] [Very much like China's economic data -Reggie]

Following the conflict, the government conducted widespread arrests of protesters and their supporters, cracked down on other protests around China, banned the foreign press from the country and strictly controlled coverage of the events in the PRC press. Members of the Party who had publicly sympathized with the protesters were purged, with several high-ranking members placed under house arrest, such as General Secretary Zhao Ziyang. There was widespread international condemnation of the PRC government's use of force against the protesters.[3]

Right. Accurate economic reporting is literally guaranteed to come out of China! For more on my opinion of China, see the China Macro Update, (also of interest is the HSBC opinion and 2H08 update).Then My view of the China hype bears additional fruit and All of my warnings about China are starting to look rather prescient.

Last modified on Tuesday, 05 January 2010 05:00