Darker side of brighter Chinese data

National Bureau of Statistics of China released several sets of data today, which present mixed picture of the economy, which on the upside seems brighter than past darkness.

Chinese retail sales rose 10.5% y/y in March, beating both previous and market expectations. While it is much lower compared to the figures seen 3-4 years back, it nevertheless can be seen as first sign of stabilization. To add to the optimism, February, industrial production rose by 6.8%, which is best growth reading since June, last year. Even YTD foreign direct investments were up 7.8% from a year ago, best reading since November.

These are signs that economy is stabilizing as Chinese government introduced new stimulus.

In the first quarter GDP grew 6.7% y/y, in line with expectations, though the growth rate is weakest since 2009.

So shall we be optimistic since Chinese economy, which has been biggest concern of investors is stabilizing.

Sure, you can be, as long as you prefer zombies.

Other sets of data showed, new loans in China rose by Yuan 2.3 trillion in March, among which 1.32 trillion are Yuan loans, 17.6 billion in bankers acceptance, 166 billion in entrusted loans, 73 billion in  Trust loans, 56 billion via equity pledging and 698 billion corporate bonds.

The above details show, the recent stabilization is very much debt fuelled one, which in the first place is the reason behind slowdown. In January, new loans reached almost 3.5 trillion Yuan, so March stabilization can very well be attributed to leverage spike in January.

China's benchmark stock index is down marginally, trading at 3078.