Leland Miller, the CEO of the China Beige Book, one of the most reliable research firms collecting data from surveys of thousands of Chinese companies and industry participants to determine the real economic and business numbers, warns of big trouble, and a Chinese Cover-up.
The China Beige Book just released to its clients a “FLASH,” including a preliminary set of first-quarter numbers for this year The release documents the first effects of the coronavirus (COVID-19) epidemic in China and shows according to Leland Miller the research firm’s CEO…
“The situation on the ground is materially worse than what has come out in the media."
This most recent China Beige Book data is a more reliable source than the lies that the Chinese government is feeding the media.
According to Miller throughout the winter of 2017-2018, the Beige Book data has told a very clear story contradicting what the Chinese government has been feeding the international media about its economy, including the claim that its steel production was ramping into high gear.
Leland Miller’s comments and his firm’s latest numbers come as the first official Chinese government data that reflects the beginning of the COVID-19 epidemic. China’s purchasing manager surveys for the manufacturing and service sectors are due for release overnight Saturday. The numbers should...” be worse than in 2008,” according to Miller, “or else they’re lying.”
During an interview with MarketWatch, Miller was quoted as saying…
“The numbers in the property sector are remarkable. It confirms this sector is at the bottom of the food chain in China right now, the last priority for Beijing in a long list of priorities. Property is extremely important because it’s the sector in which most Chinese have large portions of their wealth. Chinese people can’t get money out of the country, so they’re stuck with only a few opportunities to diversify. The bond market is scary. The stock market is scary. Property has always been the least scary thing, and the Chinese government has always known how important it is as a store of household wealth. It shows they’re more afraid of the bankruptcies of small and medium-sized enterprises. At least there may finally be a culling of the herd in terms of (real estate) developers and overleveraged firms allowed to die.”
“On the positive side, we’re seeing the job growth numbers in slight contraction. It’s remarkable they’re not much worse than that. This is an economy that could be in contraction for a long time, yet firms aren’t firing people. You can’t pay your people, you have no cash flow, no customers, so you’re paying them to stay home right now. (The lack of layoffs) is one reason you’re not seeing big-bang stimulus yet.”
When asked by the MarketWatch interviewer… “Can you talk more about what kind of stimulus options the Chinese government does have available and how effective they can be?”
Miller responded by saying…
“The big fear is that there will be millions of firms defaulting because there’s no cash flow. The government doesn’t want that to happen, that would be a disaster. And mass layoffs would be bad for the party. So people are looking to see what China is doing as far as fiscal and monetary policy. But the state controls almost all the counterparties. The banking system is run by the state, it loans to state entities. It can order them to do whatever it needs, like not call in loans. The most important lever they have is simply not allowing banks to call in loans.”
Miller tries to be optimistic..
“ …I would expect the data to get better if only because in March you’ll see firms back to work and the outbreak will hopefully be less terrible. Conditions — and data — should improve. But the implications of data anywhere near this bad is: China is an important cog in the supply and demand chains of the world. Globalization runs through China. Car factories around the world can’t build their cars because they can’t get their inputs from China. China buys a lot of commodities — oil and so on. Even if the outbreak can be contained, which doesn’t look like it, the economic impact can’t be.”
Miller’s bottom line on China’s veracity…
“You’ve got to figure that any report that comes out of China, whether economic or medical, is going to be political. ‘Take it with a grain of salt’ may be too charitable. There aren’t easy ways of getting the truth. The truth is usually something between what the Wall Street banks think, which is way too optimistic and financial Twitter chatter, which is too alarmist.