CHART OF THE DAY: The Chinese Premier’s 2 Favorite Economic Indicators Look Super Depressing

CHART OF THE DAY: The Chinese Premier’s 2 Favorite Economic Indicators Look Super Depressing

SAM RO JUL. 17, 2013, 5:18 PM 797

Earlier this week, we learned that China’s economy decelerated to 7.5% growth in Q2, which is right in line with the Chinese government’s target. However, some economists and skeptics have long argued that the economic data produced by the Chinese government is unreliable, especially since it seems to suit the needs of policymakers. As such, savvy economists often point to other indicators that act as proxies to Chinese economic activity.  These stats include purchasing managers’ indices, gasoline usage, and the export data of China’s trading partners. China’s Premier even offered his own proxy economic indicators.  Unfortunately, they don’t look too hot. From Standard Chartered’s Stephen Green: …Such proxies are, no doubt, useful pointers. But one has to be careful. Figure 11 shows two popular proxies – growth of rail freight movement and electricity production. The two (in addition to bank credit) were reported to have been favourites of Li Keqiang when he was running Liaoning province. We show what has been happening. Pretty depressing: the chart suggests that the economy has entered a recession. “However, choose different proxies and the story changes,” added Green.

screen shot 2013-07-17 at 5.14.31 pm

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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