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China's economy has turned rotten and its reopening boom is a 'charade,' market expert says

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Confidence that China's economy can rebound from Covid restrictions is untethered to economic realities, Rockefeller International chair Ruchir Sharma wrote in the Financial Times. 

 

"Something is rotten in the Chinese economy, but don't expect Wall Street analysts to tell you about it," he said, listing several indicators that point to underlying weakness. 

 

For example, Wall Street's assumption of 5% GDP growth would suggest corporate revenue growth of 8%, but it rose by 1.5% in the first quarter.

 

READ MORE

https://markets.businessinsider.com/news/stocks/china-economy-growth-model-reopening-demand-boom-covid-debt-stimulus-2023-5

 

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Rose colored glasses must have been worn by those that thought China would move at warp speed as its economy re-opened.  With businesses leaving the country and heading to Thailand, Vietnam and a few others as well as the silence in the building industry one has to wonder whether or not real data has ever been shared outside of the country.

 

This part of the link I read caught my attention.

 

"For example, Wall Street's assumption of 5% GDP growth would suggest corporate revenue growth of 8%, but it rose by 1.5% in the first quarter.

In fact, corporate revenue is slower than GDP in 20 of the country's 28 sectors, and the MSCI China stock index down 15% from a January peak, he added"

 

That to me shows that the information the initial assumptions and numbers were drawn from were faulty.  But what do I know as I am not an economist, or a business individual, I just look at things on the face value I see.

 

Pretty interesting article, well in my view at least.

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