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China Economic Data
Posted at 7:18 a.m. EST on Wednesday, April 16, 2014
Last night, China's 1Q 2014 real GDP came in at +7.4%, down from the fourth quarter's rate of growth of +7.7%, but slightly ahead of consensus of +7.3%.
Industrial production was +8.8% for March vs. consensus of+ 9%, retail sales were +12.2% compared with the consensus of +12.1% and fixed-asset investment was +17.6% vs consensus of +18%.
Everything was broadly in line and China's local market's were not impacted by the release. (I put an iShares China Large Cap (FXI) short on yesterday.)
The economic numbers are, to a large extent, fudged, as we know. And, as always, there are no subcomponents given for GDP and no deflator. The relevance here is simply to have this out of the way, as data out of China of late has been to the weak side, especially recent import data.
The general view is that China is irrelevant to the S&P index and to most capital markets in general (certain commodity markets are a different story).
GDP growth has slowed to the 7-7.5% level, down from 9.8% in 2010, 8.9% in 2011, 7.9% in 2012 and 7.7% in 2013. And the Chinese economy may slow to the 6.5-7% range by year end. But the market has likely discounted this. The slowdown would have to be much more dramatic to matter and there is no reason to expect this. Most believe markets are safe with anything aobve +6.5%.