China and the D-word
Lingling Wei, The Wall Street Journal’s top China watcher, spotlights the growing discrepancy between rosy official economic statistics and the ominous plunge in China’s bond yields, which we’ve mentioned before.
“Recent trading in the country’s bond market is screaming the ‘D’ word,” she wrote. “You heard right: ‘D’ as in depression.”
She continued:
“The speed of the drop is astonishing. The lower the yield falls, the deeper the market is signaling economic stress.
Official statistics show that China’s economy grew at 4.6% in the third quarter and is expected to reach the 5%-or-so target for the full year. In reality, businesses are struggling to keep their lights on, people are having severe difficulty in finding jobs, and municipalities are drowning in debt. Even government employees aren’t getting paid.
‘It feels like depression,’ a reader in China recently wrote to me.”
This is bad news for companies with large sales exposure to the China market. We’re thinking specifically of hotel and casino chains like MGM Resorts and Wynn Resorts, as well as companies like Starbucks, who’ve bet big for decades on Chinese consumers feeling flush.
“The speed of the drop is astonishing. The lower the yield falls, the deeper the market is signaling economic stress.
Official statistics show that China’s economy grew at 4.6% in the third quarter and is expected to reach the 5%-or-so target for the full year. In reality, businesses are struggling to keep their lights on, people are having severe difficulty in finding jobs, and municipalities are drowning in debt. Even government employees aren’t getting paid.
‘It feels like depression,’ a reader in China recently wrote to me.”
This is bad news for companies with large sales exposure to the China market. We’re thinking specifically of hotel and casino chains like MGM Resorts and Wynn Resorts, as well as companies like Starbucks, who’ve bet big for decades on Chinese consumers feeling flush.
