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Mixed Signals From Xi’s Struggling Economy
There was good news and bad news for the Chinese economy on Friday.
Let's start with the bad news. Growth was 4.6% in Q3, according to the NBS. That doesn't sound overtly bad -- and it was in line with estimates -- but it was the slowest in six quarters, and remember: The deflator's negative.
There was exactly no evidence to suggest the beleaguered property market's poised to inflect for the better. Measured against the same month a year ago, new home prices dropped more than 6% last month, ac
Curious of opinions here… what would need to be true in order to consider China investable again?
Leader change. Note the emphasis. Not leadership change, necessarily and not regime change. But leader change.
Sure, it’d be nice if China marked a transition to democracy, but that isn’t going to happen, and for the purposes of an investment case, it doesn’t have to. The Party isn’t the problem. I mean, it is, but “only” from a good governance perspective. From an investment-case perspective, the problem’s Xi. He’s gotta go, and I don’t think that’s as lost on the Party as everyone believes.
(In no way, shape or form am I advocating violence when I say he’s “gotta go.” All I’m saying is that on the current trajectory, he’s going to end up becoming an out-and-out tyrant, and he may well lead China to ruin if he takes the PLA to war against the US Navy before they’re ready. At some point, the PLA probably will be ready, but I’m not sure how you — i.e., he — can accurately assess that ahead of time. The modern PLA is completely untested. Their preparedness for war with the US Navy is probably something they’ll only be able to assess after the fact, which in this case means after they’re in Tapei or at the bottom of the ocean, whichever the case might be. All “America’s an empire in decline” narratives aside, the PLA’s a heavy underdog in that fight currently. That may be different five or even three years from now, but only a lunatic takes that risk — the risk of open, state-on-state, old school military conflict with the United States — prematurely.)
Always insightful commentary. Thank you sir!