Bad news for China from Brazil; no news in the Chinese data
Special points to highlight in this issue:
• Jair Bolsonaro’s election Sunday as President of Brazil is not, at least on paper, especially good news for China. The “tropical Trump” has attacked China consistently in his speeches, but even if he has no intention of following through, to the extent that represents growing developing-country alienation from globalization, his victory helps undermine a condition that has been fundamental to China’s success over the past four decades. China will only benefit from any reversal of globalization to the extent that it forces the country into adjusting more quickly, and then the benefit will come only over the long term.
• There have been no surprises in the recent economic data coming out of China. Growth continues to inch slower while debt continues to rise, but contrary to consensus, so far Beijing has not panicked and blown out more credit. It is however far too early to say whether Beijing’s reticence is strategic or simply a result of having been consistently flatfooted by events both domestic and from abroad.
• I am cautiously optimistic that fourth quarter growth will not come in above 6.5 percent, and would love to see (but don’t expect) that we get at least one month below that number. Although the growth rates Beijing posts over the rest of this year will have almost no real economic importance, they will give us an indication of what Beijing plans for next year.
• There is little doubt that Beijing is increasingly worried about stock market performance. It may be time to consider how the regulators may react.
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