Taps Coogan – January 17th, 2022

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Leland Miller, the man who runs China Beige Book International – the largest private in-country data-collection network in China, recently spoke with Bloomberg to warn that the closer you get to Beijing and Xi Jinping, the worse the economic data looks as everybody does everything in their power to ensure the Winter Olympics go off without a hitch. Furthermore, he warns that the often repeated line that China is starting to ease monetary and fiscal conditions to cushion the economy is “not happening yet.”

 

Leland Miller on the Chinese economy:

“It all comes down to whether Xi is embarrassed or not… They don’t want bad news… The Beijing economy is looking a little bit different from the Chinese economy writ large… It’s very rare that the coastal provinces diverge dramatically but that’s what we are seeing right now. The closer you are to Beijing, the closer you are to Xi Jinping, the worse the performance is, the worse the Covid crackdowns are… I think this is in preparation for the fact that everyone is so nervous about the Olympics.”

“Everyone is getting ahead of themselves… Everyone sort of knows that policy is going to get eased one way or another, maybe mildly or not…, and they want to be the first one to announce, whether it’s a media publication or a sell side pamphlet on Wall Street… It’s not happening yet. Will it happen eventually? Sure. They’re going to have to boost sentiment some time in 2022… but right now we are seeing borrowing numbers that are similar to the lows of 2021. We are seeing pent up demand numbers which are similar to the lows of 2021 which are lowest levels we’ve ever seen in the history of China Beige Book data… (Easing) is not happening yet…”

Leland Miller on Hong Kong:

“All the problems with Hong Kong, basically that it’s being taken over by Mainland China… have been exacerbated by Covid… Unless you’re Jamie Diamond, you can’t talk to someone who goes in and out of Hong Kong and isn’t being driven crazy with these quarantine rules. It’s not a way to do business. The island has a historically important position… but there is no way that Hong Kong is going to be this important in five years. It’s declining every year. It’s becoming too Chinese. It’s becoming too closed. It’s too hard to travel to. It’s a sad, sad story.” 

There is more to the interview, so enjoy it above.  

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