It's another Christmas miracle...
During a speech in Davos, Chinese Premier Li Qiang 'leaked' that China’s economy grew an "estimated" 5.2% last year, beating the official target of 5% (its lowest in decades).
We say 'leaked' because this data was supposed to be officially released tonight, prompting anger and disillusionment from some:
“China used to be a place where you’d know when this sort of thing would be published, but that has changed radically,” said Alicia García-Herrero, chief Asia-Pacific economist at Natixis, who described the decision to announce the figure early as “bewildering”.
A bigger problem for liquidity-hypers was that Li explicitly pointed out that China’s growth rate last year - a rise from the figure of 3% in 2022 when the country was hit by its arcane Zero-COVID policies - was achieved without resorting to “massive stimulus” and the economy was making “steady progress”.
“We did not seek short-term growth while accumulating long-term risks, rather we focused on strengthening the internal drivers,” he said.
“Just as a healthy person often has a strong immune system, the Chinese economy can handle ups and downs in its performance. The overall trend of long-term growth will not change.”
Ironically, Bloomberg reported this morning that China is considering 1 trillion yuan ($139 billion) of new debt issuance under a so-called special sovereign bond plan, only the fourth such sale in the past 26 years, as authorities seek more money to finance intensifying efforts to shore up the world’s second-largest economy.
But that news is old and regurgitated...
And given Li's comments, this is not something traders should expect to be systemic liquidity provision from Beijing.
Li also urged greater co-ordination between countries on macroeconomic policies, a reference to efforts by the US and its allies to reduce the reliance of their supply chains on China.
Do you believe in miracles?
The Chinese equity market doesn't...
And Chinese macro-economic data certainly hasn't been supportive of this expectation...
Given the 'surprise' economic growth, we couldn't help but giggle at the irony of Li's shot across the US bow with regard "trust deficits."
'Trust' in data, politicians, and the rule of law appear in short-supply across the globe.
