China: In School, No Masks, and a Runaway Stock Market

And on track to record 3% GDP growth this year

Don’t be jealous. But China is winning the coronavirus war.

Okay, you can be angry. At least frustrated.

Their kids are in school. They’re not wearing masks. Waiters in Chengdu…no masks. Gamer fanboys in Shanghai cued in line at last week’s Cartoon and Gaming Expo, masks half on, half off, by the hundreds.

And their economy will grow by more than 3% this year, Barclays Capital estimated on Friday.

China’s economy rebounded to a growth rate of 3.2% annualized in the second quarter, up from the 6.8% contraction in the first. It exceeded the Bloomberg consensus of 2.4%.

China’s numbers are supported by the sustained recovery in demand, both foreign and domestic. Retail sales continue to disappoint, but that’s mostly being dragged down by car sales.

Stimulus is the name of the game. The strong rebound is due in large part to infrastructure spending and new infrastructure project approvals (in May,they were up 11% annualized and in June, up 8%). And rising property investment (up around 9% from May to June) as this is China’s main savings account, considering they are not allowed to invest abroad, and everyone in China knows the Shanghai and Shenzhen stock exchanges are something akin to a Macau casino.

Anyway, China is having a V-shaped recovery and we are not.

China is not having any worrisome outbreaks of the coronavirus. Maybe they are lying. If they are, they seem willing to put their school children in danger.

Their stock market is growing like gang busters.

There is still a surge in new export orders to a 3-month high, thanks to foreigners stocking up on surgical masks and PPE that no one else in the world seems to know how to make.

But, China’s June export data overall showed a broadening of the export recovery from May as the U.S. and Europe tip-toed out of lockdowns, so it wasn’t just product related to the pandemic that China was shipping to world markets.

China’s V-shaped economic recovery continued for a fourth consecutive month in June, led by strong domestic demand. If Covid-19 remains under control, China can remain the world’s best consumer story.

On the 19th anniversary of the publication of “The Coming Collapse of China,” it is worth noting the resilience of the Chinese economy, which has survived the Global Financial Crisis, the Trump tariffs and now the coronavirus, notes perennial China bull Andy Rothman, investment strategist for Matthews Asia.

In 2001, Gordon Chang (Rothman’s nemesis) forecast China’s hard landing. He was not alone. The hard landing guys have been calling for this for at least as long as I have been covering China both from abroad and on the ground, and that’s been since 2011.

China is really starting to aggravate people. If not just for spreading the coronavirus, but for the fact that it is doing better with it than anywhere else (so it seems) and last year they accounted for 40% of global economic growth, larger than the combined contributions to global growth of the U.S., EU and Japan, according to IMF data.

The EU is basically third fiddle. They will chose the Chinese over the U.S. any day of the week. And those trade numbers are why. The second reason might be their disdain for Queens-local Donald Trump, though this is only temporary. Europe will love China long after Trump is gone. Witness their silence on Hong Kong and the Uighur camps in Xinjiang.

Actually, there is supposedly an outbreak of the coronavirus in Xinjiang at the moment.

Though worth noting, the last time China reported an outbreak it was in a region of Beijing and it included maybe 115 people and now it’s not even a headline.

A month ago, Wuhan tested 11 million of its inhabitants for the new SARS coronavirus. Wuhan is the home base of the news SARS diseases, known as CoronaVirus-2019, or Covid-19. Only around 300 people had it. Three hundred out of a population of 11 million who have all come out of hiding. Apparently the virus was still around enough to infect 300 once they came out of their locked apartment dwellings. But not 10.9 million others. That’s amazing.

Then again, the first SARS lasted only 8 months and it died. If it is still alive, we never hear from it, and it certainly doesn’t drive people to drink like this current version.

Love it or hate it, China is rewarding one of its biggest benefactors: Wall Street. One doesn’t have to work for Goldman Sachs GS -0.2% or have a million dollar initial investment to put money to work in China. There are plenty of exchange traded funds out there, from BlackRock BLK -0.2%’s iShares products, to Deutsche Bank’s X-trackers, and the KraneShares niche ETFs like the healthcare one (KURE) and the e-commerce and internet one (KWEB). They’re all up. KWEB is up two times more than Nasdaq NDAQ -0.8%. An investment in KURE has done better for retail investors than Gilead Sciences GILD +0.5%, Pfizer PFE -0.3% and AstraZeneca year-to-date.

Back in April, China’s first quarter macro data was the weakest since the Tang Dynasty. Life didn’t start to return to some semblance of normalcy until the end of March after over six weeks of being totally closed for business.

China’s economy is increasingly driven by domestic demand and tech.

Last year was the eighth consecutive year in which the consumer and services part of China’s GDP was the largest part, beating exports.

Although consumer spending is likely to remain softer than usual until next year as even the Chinese are still at least somewhat afraid of the coronavirus, China is likely to remain the world’s best economy this year…and next year.

Whether Covid-19 data out of China is remotely trustworthy, I leave you with Mr. Rothman from San Francisco’s Matthews Asia:

“I know that some investors wonder whether the Chinese government’s Covid data can be trusted. I think there are two reasons to believe that since January 23rd—when the government shut down the city of Wuhan, where the virus was first identified, and which has a population larger than that of New York City—the Chinese government has not been deliberately falsifying its data. First, if the number of hospitalizations and deaths were significantly higher than the official statistics, we would be hearing about it on social media from the family and friends of those patients.”

Makes sense. And their parents wouldn’t be sending their kids to ballet summer camps and teachers probably wouldn’t be having them hover over each other in a classroom.

Source: Forbes

  1. cechas vodobenikov says

    US economy-fake and disintegrating…nobody needs to destabilize this police state oligarchy—they destroy themselves…now a nation of plywood villages infested w ugliness and violence….where USA has incredible poverty and extreme poverty—Russia/China no extreme poverty…of course the US lies…they measure poverty for a family of 4 according to an income of 25000$ annually…covid fascism has hastened to collapse of the rotting empire—a contracted economy by 30-50% depending on which lying US economist u believe. In the USA they believe happiness is GDP—money worshippers cannot produce social change
    covid fascism has most benefitted billionaires in the USA—increased 500 billion$ in only 4 months

  2. XRGRSF says

    This article, and my dog have one very important thing in common; they both put a big, happy smile on my face.

  3. Joe Spotfly says

    In dollars, the Chinese equity market is no higher than it was in 2008. See the FXI. Way to use a small time frame to prove your point. But its forbes after all. If covid teaches us anything or 911, or ISIS or Syria etc., never use a mainstream publication as a source. These people are paid to lie.

    1. XRGRSF says

      China’s economy is no higher when compared to what? The U$D is based on nothing, but debt/usury economics while China has a rock solid balance sheet. China has already won.

  4. Aurum Cimex says

    The real economy in China must be crushed irrespective of the stock market. Massive floods for weeks taking out millions of acres of farmland, thousands of factories and untold numbers of homes following terrible lockdowns. I simply do not believe any government statistics especially when they are issued by totalitarian communists (which admittedly applies to most governments now).

    1. XRGRSF says

      The examples that you have given are deliberate lies or things that have happened many times in the past. China has had massive floods in the past where there has been a terrible loss of population, but China has survived these floods because now they are ready. What terrible lock downs are you talking about? If you’re talking about the WooHooFlu China’s statistics are accurate, the flu has been defeated, and China’s base has continued to prosper. It’s sad to be a troll dragging for a dying empire.

    2. cechas vodobenikov says

      agree–it would be farcical to believe any that exists in the amerikan dictatorship

    3. Godfree Roberts says

      We have accumulated 68 years of Chinese stats. Can you identify one that was false or misleading?

      1. cechas vodobenikov says

        while conditions have improved remarkably in China during the past 30 years—everything in USA is decaying—infrastructure, culture, economy, etc…unless one believes plywood is preferable to glass windows, and destroying small enterprises is wonderful…now an oligarchy police state with amongst the greatest income/wealth disparities of all nations

      2. disqus_3BrONUAJno says

        It would be harder to tell which were wholesale inventions of the CIA.

        1. Godfree Roberts says

          Here’s a no-brainer:
          The Fortune Global 500 is now more Chinese than American

          The Fortune Global 500 list is out this morning, and you can find it here. Walmart once again tops the list, followed by three Chinese companies—Sinopec, State Grid and China National Petroleum. The big story is this: for the first time, there are more Fortune Global 500 companies based in Mainland China and Hong Kong than in the U.S.–124 vs. 121. Add in Taiwan’s companies, and the Greater China total jumps to 133.

          It’s hard to overstate the significance of the change in the global economy that represents. As Fortune Editor-in-Chief Cliff Leaf points out, when the Global 500 list first came out in 1990, there were no Chinese companies on the list. In the intervening three decades, the Chinese economy has skyrocketed, powered by a global trade boom that expanded from 39% of global GDP to 59%.

          1. disqus_3BrONUAJno says

            Do they tell the story about what happened to China’s national debt in the meantime?

            1. Godfree Roberts says

              You mean this story?

            2. disqus_3BrONUAJno says
            3. Godfree Roberts says
    4. disqus_3BrONUAJno says

      Are you talking about China’s disappearing totalitarians or America’s burgeoning ones?

  5. chris chuba says

    All of them were wearing masks in Feb / March. Being mask free today is a reward for their aggressive and prudent early reaction. We in the U.S. have a high infection rate compared to SE Asia because we refuse to learn from them, only sneer at them.

    1. disqus_3BrONUAJno says

      How long have you been practicing epidemiology?

      1. chris chuba says

        I read. What specific point of fact do you disagree with.
        Back in February, I saw pictures of Chinese in subway cars wearing masks. I read about ethnic Chinese in San Fran getting dirty looks in Feb/March because they wore masks while us long noses glared at them. I visited Japan once and noticed that wearing masks was well, common, I even asked about it. Do you deny that wearing masks is a common practice in SE Asia and they it makes sense that they would ramp it up during an outbreak?

        Regarding death rate, because people argue incessantly that infections are overcounted, I got the numbers hear.
        Sum up the population of Japan, Taiwan, S.Korea, Vietnam, Thailand, an Laos and you will get 250M+ and less then 2,000 deaths vs our 170,000 deaths. These numbers are going to be the ones reported to WHO.

        I know all of these numbers are fake, only Glenn Beck knows the true numbers.

        1. disqus_3BrONUAJno says

          Glenn Beck makes up history in his books.

    2. Ron Ronery says

      The US would have been fine if people were encouraged to obtain mass immunity. Yes, people would have died but 99% would be elderly and people with underlying illness. It would have been just another very bad flu season were it not for the FAKE agenda driven PLAN-demic.

      1. LS says

        Correct. ‘Covid-19’ is a component of a political plot.
        I noticed that they aren’t closing down the American colleges leftist brainwashing centers.

      2. disqus_3BrONUAJno says

        Researchers everywhere are having trouble finding infected people to obtain plasma and antibodies from because there are none.

  6. LS says

    Godspeed to China!

    And the sooner America goes out of business, the better.

  7. disqus_3BrONUAJno says

    China’s stock market is running away for the same reasons that America’s are, and it has nothing whatsoever to do with masks or schools.

  8. James Willy says

    Great to see China winning and getting ahead. Just too bad they refuse to retaliate to seppostan for the Covid attack. China should destroy both yankeestan and london city. These CS are the ones responsible for this bio attack. China needs to stand up and retaliate. Destroy the dollar at least. SOMETHING????????????? Hello Xi

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