Taps Coogan – March 31st, 2023

Leland Miller, the man who runs the largest private in-country data-collection network in China – China Beige Book International, recently spoke with Bloomberg to share his outlook for China going into the second quarter. Having been notably bearish on China for the last few years, and right in that stance, Mr. Miller now sounds much more bullish, at least in the short term:

Leland Miller on Q2:

“Back in December, what we made very clear was that, yes, China was reopening but it was not going to reactivate. You had many people sick with Covid… it took many months to sort of get out of (the Covid-Zero) system. So, you are looking at March, April, the second quarter as the potential time for this recovery… Things are lining up in a very positive way. If you look at the retail and services data on the top level, not great yet, but if you are looking at the borrowing numbers, the capex numbers, the trend is going up… Things could get a lot better later this year.”

Why this didn’t happen in Q1:

“The reason this didn’t happen earlier is because everybody was sick with Covid or getting over the hiccups of transitioning from the Covid-Zero era. If you looked at subway indicators, people said ‘Oh everybody is moving around,’ but they weren’t buying, they weren’t investing, they weren’t hiring. We’re starting to see that now. So we’re on the cusp of a much more impressive set of data.” 

On the longer term:

“We are entering an era of structurally lower growth (for China). There is going to be a bounce back from the Covid-Zero time. 2022 was an absolute disaster… There is going to be improvement off of 2022 and there is going to be an improvement in the second quarter. There is going to be a bombastic reactivation… But you are not going into an era of anything but structurally lower growth…”

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