China Has Ground To A Halt: "On The Ground" Indicators Confirm Worst-Case Scenario

[Elderberry]

Zero Hedge by by Tyler Durden 2/14/2020

Back on Monday, when analysts and investors were desperately seeking clues whether China has managed to reboot its economy from the 2-week long hiatus following the Lunar New Year/Coronavirus pandemic amid the information blackout unleashed by the communist party in the already opaque country, we pointed out some alternative ways to keep tabs of what is really taking place "on the ground" in China, where Xi Jinping has been urging local businesses and workers to reopen and resume output, while ignoring the risk the viral pandemic poses to them (with potentially catastrophic consequences).

Specifically, Morgan Stanley suggested that real time measurements of Chinese pollution levels would provide a "quick and dirty" (no pun intended) way of observing if any of China's major metropolises had returned back to normal. What it found was that among some of the top Chinese cities including Guangzhou, Shanghai and Chengdu, a clear pattern was evident – air pollution was only 20-50% of the historical average. As Morgan Stanley concluded, "This could imply that human activities such as traffic and industrial production within/close to those cities are running 50-80% below their potential capacity."

As a reminder, all this is (or technically, isn't) taking place as President Xi Jinping on Wednesday sought to send a message that progress had been made in bringing the coronavirus outbreak under control and, for most parts of the country, the focus should be on getting back to business. According to state television, Xi chaired a meeting of the Politburo Standing Committee, China’s supreme political body, on the latest developments on the crisis and future policy responses, concluding that there had been “positive changes” with “positive results”.

More: https://www.zerohedge.com/economics/china-has-ground-halt-ground-indicators-confirm-worst-case-scenario

[skeeter]

China would not accept the loss of billions of income dollars as they have if this weren't a bona fide code red emergency.

[Elderberry]

China Is Disintegrating: Steel Demand, Property Sales, Traffic All Approaching Zero

Zero Hedge 2/15/2020 by Tyler Durden

https://www.zerohedge.com/economics/china-disintegrating-steel-demand-property-sales-traffic-all-approaching-zero

In our ongoing attempts to glean some objective insight into what is actually happening "on the ground" in the notoriously opaque China, whose economy has been hammered by the Coronavirus epidemic, yesterday we showed several "alternative" economic indicators such as real-time measurements of air pollution (a proxy for industrial output), daily coal consumption (a proxy for electricity usage and manufacturing) and traffic congestion levels (a proxy for commerce and mobility), before concluding that China's economy appears to have ground to a halt.

That conclusion was cemented after looking at some other real-time charts which suggest that there is a very high probability that China's GDP in Q1 will not only flatline, but crater deep in the red for one simple reason: there is no economic activity taking place whatsoever.

We start with China's infrastructure and fixed asset investment, which until recently accounted for the bulk of Chinese GDP. As Goldman writes in an overnight report, in the Feb 7-13 week, steel apparent demand is down a whopping 40%, but that's only because flat steel is down "only" 12% Y/Y as some car plants have ordered their employee to return to work (likely against their will as the epidemic still rages).

However, it is the far more important - for China's GDP - construction steel sector where apparent demand has literally hit the bottom of the chart, down an unprecedented 88% Y/Y or as Goldman puts it, "construction steel demand is approaching zero."

But wait, there's more.

Courtesy of Capital Economics, which has compiled a handy breakdown of real-time China indicators, we can see the full extent of just how pervasive the crash in China's economy has been, starting with familiar indicator, the average road congestion across 100 Chinese cities, which has collapsed into the New Year and has since failed to rebound.

More at link.

[roamer_1]

The Baltic Dry  Index is another indicator, so I have been told.

[Elderberry]

The Baltic Dry  Index is another indicator, so I have been told.

What's it say about China?

[roamer_1]

What's it say about China?

I only caught it in passing, but it is indicative of European materials and dry goods shipping eastward.  For their industries to be running in China, materials need to be flowing. They are not.

[Elderberry]

Baltic index near 4-year low as virus mutes shipping activity

Reuters February 11, 2020

https://www.reuters.com/article/baltic-index/baltic-index-near-4-year-low-as-virus-mutes-shipping-activity-idUSL4N2AB2YB

The Baltic Exchange’s main sea freight index edged up from a near four-year low on Tuesday, while the larger capesize segment remained in negative territory, as the coronavirus outbreak in China crippled demand.

* The Baltic index, which tracks rates for capesize, panamax and supramax vessels that ferry dry bulk commodities, rose 7 points, or 1.7%, to 418.

* The main index slid to its lowest level since March 2016 in the previous session.

* Demand has already been hit strongly in China, which accounts for almost 40% of total dry seaborne imports, Charles Chasty, research analyst at Affinity Shipping, told the Reuters Global Markets Forum.

* “We expect the coronavirus, should it last for a while longer, to have a more deteriorating impact on the dry bulk market, owing to China’s dominant position within the market.”

* The coronavirus outbreak in the world’s second-largest economy has killed more than 1,000 so far and threatened the country’s economic growth.

More at link.

[roamer_1]

Yep. That's it.

[bigheadfred]

I looked at it. They cover quite a bit of the world's shipping. Their index has dropped significantly.

Reading it over part of the drop is the 'trade war' with China. Currently they are nearing an historic low, probably because of Corona.

[bigheadfred]

@Elderberry

Yep. That's it.

[Sighlass]

I was looking at LiveLeak yesterday and there was videos of China folks spitting on elevator buttons and spitting everywhere and smearing it around so other folks would get the virus I guess. Just sorta made me think how in America, we don't corner the market on being rude and vicious.

They would have napkins so you could not touch the buttons, but they would spit on the napkins and place them back in the box for the next person to touch.

[PeteS in CA]

My daughter mentioned that she'd seen reports that travel is down 50%-80% from normal levels.

[bigheadfred]

My daughter mentioned that she'd seen reports that travel is down 50%-80% from normal levels.

Reports from Chinese officials?

[Free Vulcan]

Lack of China output is going to create scarcity of finished goods in the US, and will likely result in inflation.

But that's not the scary part. China extracts makes so many raw and intermediate goods that commodities, parts, and capital goods will also get scarce, meaning it might be difficult to manufacture it here.

[bigheadfred]

Lack of China output is going to create scarcity of finished goods in the US, and will likely result in inflation.

But that's not the scary part. China extracts makes so many raw and intermediate goods that commodities, parts, and capital goods will also get scarce, meaning it might be difficult to manufacture it here.

The horror of the retribution from Greta if we even tried to do some logging, mining, or open up a few thousand factories.

[PeteS in CA]

Reports from Chinese officials?

News reports, some in Mandarin (in which she is fluent). And since she lives in China (but is here on visit) she also has friends who live there.

[bigheadfred]

News reports, some in Mandarin (in which she is fluent). And since she lives in China (but is here on visit) she also has friends who live there.

Glad she is here. I thought she had gone back.

[PeteS in CA]

Glad she is here. I thought she had gone back.

US flights in and out of China have been banned for a couple of weeks. The current resumption date is 3/30.

[bigheadfred]

US flights in and out of China have been banned for a couple of weeks. The current resumption date of 3/30.

@mountaineer posted an article here that there may be reinfection occurring with COVID-19.

Depending on how things 'pan' out they may push that date back.