China Says Growth Is Fine. Private Data Show a Sharper Slowdown
Comment of the Day

September 09 2019

Commentary by Eoin Treacy

China Says Growth Is Fine. Private Data Show a Sharper Slowdown

This article by Mike Bird and Lucy Craymer for the Wall Street Journal may be of interest to subscribers. Here is a section:

SpaceKnow tracks about 6,000 industrial locations in China and analyzes data on night-light luminosity and infrared bands—indicators of heat produced by electricity or factories—from about half those sites roughly every two weeks. It produces a proprietary index that has become a leading Chinese PMI indicator used by hedge funds, central banks and policy makers, said CEO Jeremy Fand.

“You can see factories suddenly go quiet, giant subdivisions, huge construction projects just get halted,” said Mr. Fand. In August, SpaceKnow’s index pointed to a slight expansion, coming close to official figures that analysts said reflected a pickup in production before more U.S. tariffs came into effect.

Mr. Fand said the company is also working on a project for a U.S. government agency that is trying to analyze the impact of U.S. tariffs on China’s economy and certain industries.

Last December, U.S. exchange operator Nasdaq Inc. bought an alternative-data business called Quandl Inc. Bill Dague, a data scientist leading alternative research at Quandl, has traveled to China in recent months to hunt for new data sets for clients.

“Because it is so hard to get data out of China, demand has surpassed supply,” he said, adding that escalating U.S.-China tensions have made domestic data vendors less willing to share information with U.S. companies.

Eoin Treacy's view

Nothing is ever as it seems in China. Investors were willing to look past that fact while the economy was posting world-beating growth. With the expansion slowing investors now have a clear incentive to do whatever is necessary to find accurate data on both the quality and quantity of the economic expansion.

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