China Only Growing at Around 5 Percent According to J.P. Morgan’s Head of Research
China Only Growing at Around 5 Percent According to J.P. Morgan’s Head of Research

NEW YORK—Nobody, not even the Chinese regime knows whether the economy is still growing or contracting at this moment. The only thing most people—including the regime—can agree upon is the official numbers are bogus.

“The Chinese economy clearly is not growing at anything like 7 percent,” billionaire investor Wilbur Ross Jr. of WL Ross and Co. told Epoch Times. He thinks it’s more like 4 to 5 percent rather than the officially propagated 7 percent.

If we follow the reasoning of J.P. Morgan’s head of research Joyce Chang, he might just be right.

“We estimate every 1 percent slowdown in China takes about 0.5 percent off of global growth. That impact on emerging markets is more severe than on developed markets,” she said at a panel discussion at the Council on Foreign Relations on Sep. 16. It has more of an impact on Japan … and emerging markets: you have a 1:1 impact.”

So far so good. However, she then proceeds to say that Latin America is in recession, as well as Russia. Japan isn’t doing great either, so if we take the 1:1 impact literally, China is not only growing at far less than 7 percent, the slowdown is also accelerating.

Let’s look at the year-over-year numbers for the recent quarters for some of China’s most important trading partners.

  1. China officially started slowing down in the third quarter (Q3) of 2014 (7.4 to 7 percent in Q2 of 2014).
  2. The Japanese economy crashed from -0.4 to -1.4 percent in Q3 of 2014 before recovering in the second quarter of 2015.
  3. Brazil fell into recession in Q3 2014 and the slowdown accelerated this year (-1.6 to -2.6 percent in Q2 2015)
  4. Russia managed to hold stable for most of 2014 before falling off a cliff in 2015 (0.4 to -4.6 percent in Q2 2015)
  5. Canada is still growing, but decelerated from 2.6 percent in Q3 of 2014 to 1 percent in the Q2 2015.
  6. Australia crashed from 2.8 percent growth in Q2 2014 to 2 percent in Q2 2015.
  7. South Korea crashed from 3.3 percent growth in Q2 2014 to 2.2 percent in Q2 2015.
  8. Singapore went down from 2.8 percent in Q3 2014 to 1.8 percent in Q2 2015.
  9. South Africa went down from 1.6 percent Q3 2014 to 1.2 percent in Q2 2015.

Of course, each country has its own special situation. Japan is fiddling around with taxes as well as monetary policy. The low oil price as well as Western sanctions surely aren’t helping Russia. But the marked slowdown of 1 to 2 percent in most cases, especially for the commodity exporters as well as the crash in China trade show a clear pattern that started in Q3 2014.

If we take Joyce Chang’s calculations at face value, we are looking at Chinese growth at around 5 percent, exactly where Wilbur Ross put it.   

Citigroup’s chief economist chimed in with his own estimate during the panel: “We are seeing the deceleration of investment we are not seeing the pickup of consumption. This to me reads recession Chinese-style. Growth of 2–3 percentage points lower now than it is today,” he said.

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