“It’s A Lot More Negative Than People Think” – China Beige Book Issues Stark Warning About The Economy

While China’s excess debt problems have been extensively documented, the overall economy appears to also be slowing substantially as a result of the decline in the most recent credit impulse, noted as recently as one week ago when we reported that “Chinese Loan Demand Dropped To All Time Low.” Overnight, the latest warning about China’s economy came from the authors of the China Beige Book, a quarterly survey that tracks the world’s second-largest economy, who said that recent stability in the Chinese economy masks deep-seated problems that threaten to rattle global markets in advance of a leadership change next year, and added that ignoring these risks is shortsighted.
As reported by the WSJ, data from the group’s Q3 survey of 3,100 Chinese firms and 160 bankers point to some potential problems. New growth engines intended to shift the economy away from investment toward consumption-led growth are increasingly wobbly as corporate cash flow is squeezed and Beijing doubles down on traditional engines to stabilize output, the China Beige Book says.
‘I’d find it earth-shatteringly surprising if we don’t have a significant problem between now and China’s leadership change’ in the fall of 2017 when the 19th Party Congress convenes, said Leland Miller, China Beige Book’s president. ‘This is not a stable economy. It’s one that twists and turns and happens to end up at the same spot. There are real problems below the surface.’

This post was published at Zero Hedge on Sep 28, 2016.