Ah, we arrive at last, dear readers, at that time of the year when the trickle of economic indicators becomes a flood of new data on how China fared during the first six months of the year. And wouldn’t you know it, even with GDP coming in at a pitch-perfect 7% for the second quarter, not a few more recent figures seem to be disappointing investors the world over.
One number that didn’t disappoint was outbound investment, which grew nearly 30% in H1. Now that’s still a bit short of foreign direct investment, but with investment inflows only growing about 8% for the period we’d suggest all the finance industry sad sacks out there buck up: Soon you’ll have the chance to excitedly report about how China is a net provider of investment for the rest of the world.
But profitable investment can be its own worst enemy, dear readers, as it was this week for Apple. Riding high on robust growth in China, where sales of its new and absurdly large iPhones more than doubled, the glass and aluminum-plated house that Steve Jobs built saw profit grow 38% in its third fiscal quarter. But was that enough to satisfy investors? Based on the 7% dip by the company’s shares following the announcement we’d say not.
Even unexpected windfalls in financial data seem to be upsetting the apple cart. You’d think gold markets would welcome a little more clarity on China’s reserves of said precious metal, as provided early this week when the central bank revealed its stores had grown 60% since they were last divulged in 2009. But no, dear readers–indeed, quite the opposite: Gold prices fell by more than 4% on Monday when a selloff in Shanghai and New York sparked a minor flash crash. These metals traders are a jumpy sort, we tell you.
Not like farmers. Now there’s a profession with a little dependability. Seasonal cycles can always be depended on for a bit of profit, whether you grow sorghum or swine–especially, in the case of the latter, when you know how to play China’s increasingly notorious pork production cycles. After suffering from massive oversupply, pork production fell nearly 5% in the year’s first half, prompting a price spike of 5.5%.
But perhaps with the IMF calling this week for more robust reforms to China’s financial system, such boom-bust cycles will become a thing of the past. Maybe in pursuit of a more prestigious position for the yuan internationally, Beijing will finally adopt the kind of regulatory regime that can once and for all ensure that business confidence isn’t at risk of suddenly slipping to all-time lows as it apparently did last month. Perhaps they’ll achieve a capitalist utopia that’s free of all bubbles, as they seem to be attempting with the stock market.
Maybe. Maybe not. But whether China is a fully functioning market or a permanent wild west of finance, we expect we’ll be laughing all the way to the bank.