This is according to the Wall Street Journal as of 9:59 PM BST, which I think was just before 4 PM this afternoon in the eastern US, just over an hour ago. Brent is the main international price, which has been several dollars above the main US price, West Texas Intermediate (WTI) for a long time, with WTI having fallen below the $50 per barrel price some weeks ago.
The article pinpoints two signal items in this sharp price decline today. The first is that US oil production is at record levels. The other is on the demand side, with slowdowns in demand from Brazil and India noted, but the really big item a piece of information released today by the Chinese government, and I quote:
"Chinese manufacturing fell to a two year-low, according to data released Monday [today]."
To those, such as anne over on Economists View, who think that all is just hunky dory in China and that the 7% growth rate reported for the second quarter is credible, well, it is not.
My own private sources say that the Russians think Chinese growth is now more in the 4-5% range, and I note that not only are the Russians currently making lots of deals with, and friendly with, China, but they are also very experienced in the arts of data manipulation that it appears the Chinese are engaging in again.
OTOH, on Econbrowser is a guest post by Jeffrey Frenkel who argues that what burst the Chinese stock bubble in June was a tightening of margin requirements by Chinese regulatory authorities. So, they goosed the bubble up, and since it has fallen they have engaged in extraordinary actions to slow its slide. But they may well have been the parties who triggered the peak and the subsequent decline by their own actions.
Barkley Rosser
The Chinese authorities promoting a stock bubble seems really strange. One suggestion is that they are trying to deal with excessive debt load problems by swapping some of it out for equity. But authorities deliberately promoting bubbles sounds to stupid to be believed. Who could be so stupid, (other than the Japanese)?
ReplyDeletePettis,- (yeah, I know),- has been saying for years that successful rebalancing of the Chinese economy would require a growth rate of at most 3-4% for a decade or more.
John,
ReplyDeleteI am not disagreeing with Pettis, simply pointing out that others have been making similar arguments as he has for about as long, if not longer. Just not impressed with the claim that he has been way out there in front of everybody.
What may explain the weird behavior of the Chinese regulators, although I do not know about this for sure, is that we may be seeing actions by different bodies. China does have a very large bureaucracy, and that one part of it might be acting not in concert with another part of it is highly possible. Heck, I have seen single agencies have different branches that act in conflict with each other.
I'm sure you know this, but just for the sake of anyone else who might be listening (ha!), Chinese GDP figures are Y/Y, which makes trying to back out the quarterly figure, annualized or not, a ticklish business.
ReplyDelete