More on China Q3 GDP

BOFIT calculations (based on Kerola (2019)) indicate a slower pace of growth than officially reported. Year-on-Year, the simple average of alternative calculations is less than 4%, compared to the 4.9% officially reported (which is at the top of the range of growth rates from the alternative calculations).

Source: BOFIT.

Interestingly, the Q2 gap is not as large as that reported by Fernald et al. as discussed in this post: 3.9% vs. 6.3%. The Fernald et al. approach places greater weight on trade data than does the various approaches adopted by Kerola (2019), so there is no particular reason for the estimates to match.



65 thoughts on “More on China Q3 GDP

  1. Moses Herzog

    So, I’ve probably stated something very similar to this comment at least 15–20 times on this blog. But I feel it bears repeating. I spent 7 solid years in China. And I’m very ashamed and embarrassed to say in those 7 years I never learned the language as well as I should have. But I still feel I knew the place well, and got a knowing “vibe” of the place. And my overall impression was a good many of them are kind, gracious people, gracious hosts, highly intelligent (many of them speak better English than south of Mason-Dixon line USA southerners). And the culture really is deep and broad in many aspects. They have the ability and potential for greatness. They could match Britain, Germany, USA etc anytime they decided they really wanted to. And they even have “the drive” and “the aspirations”. NO problem in that dept. But what is the problem?? I always think of the same thing when I think why China languishes when they could be so great~~~Systemic problems, and W Edwards Deming’s “red beads test”.

    That red beads test, will teach you everything a person needs to know, about why a nation which could be top 5 in nearly every category under the sun, sits around and lies about its economic numbers.

    1. David O'Rear

      Mr Herzog spent a mere seven years in China without being able to communicate in the language, but because he gets the “vibe,” suddenly he believes he knows more about their macro economy than the professionals.
      Absolutely astonishing.

      1. Moses Herzog

        Hahahaha. It seems I hurt your feelings somewhere here Mr Rear.

        But honestly, I don’t feel I know more about China’s macroeconomics than the professionals. The understanding about China I DO have is because I defer to and listen to the professionals, such as Menzie, Michael Pettis, Brad Setser, Chinese Americans (or just like the American Americans who would know out of personal interest~~those weird people who believe in knowledge, education, and aren’t MAGA, which weirdly their voting record shows) in academia, and the occasional mainland Chinese economist or mainland Chinese political analyst who admirably and bravely speaks his/her mind, and my memories of Chinese English speakers, who were my friends (why they wasted their time to be a friend to a loser like me I don’t know, but that’s the grace of God I guess) who had PhD and Masters from some of the best “key universities” in China.

        And NO, I don’t consider a Mr Rear, “a professional” (professional brown nose A$$ smoocher for a job in HK maybe). If I considered Mr. Rear “a professional” I’d pull back on the horse reigns before finding it so easy to catch his baloney.

        I just had a flashback to a guy who resided in Virginia who leaned back on credentials when spouting nonsense. Isn’t that weird?? Oil experts in Cape Cod. Life is grand. But I am in a good mood right now.

      2. Moses Herzog

        I wanna say something, after having a few more swigs of wine coolers here. I respect/respected Professor Rosser more than Mr. Rear. Because in his own weird self-denial mind, Professor Rosser did have a personal code of ethics, which he tried to stick to. Rosser, just like Mr. Rear said some mean things to me, but I think in his own mind Rosser felt he was on the side of right. I think Mr. Rear knows what he does in HK is very unethical. Mr Rear knowingly does unethical/immoral things. So that’s the line I draw between Professor Rosser and Mr. Rear.

        1. David O'Rear

          Mr Herzog,
          Please do elaborate on the unethical things you seem to think I did back in 1984-2015, when I lived and worked in Hong Kong.
          Feel free to be as specific as you wish. For example, advising on restructuring the healthcare system or implementation of the first ever minimum wage.

          But, since the topic is China’s economy, perhaps you’d like to dissect something you think I did in that sphere. Identifying the gap between provincial and national GDP figures back in the early 1990s, for example.

          (By the way, I seem to be quite capable of spelling your name correctly, whereas you are still using my old nickname from primary school.)

          1. Moses Herzog

            Starting off with, in a not very indirect way telling us child labor and unsafe labor conditions in India/Bangladesh are/were a wonderful thing?? And that Labor unions (whose leaders have been murdered) are “the enemy”?? I could go on, but you almost make it easier than Barkley Rosser did. Comparing you with Rosser is the highest “backwards praise” I can offer.

          2. Moses Herzog

            @ Mr. Rear,
            “Identifying the gap between provincial and national GDP figures back in the early 1990s,”

            I don’t think you were the first person to notice the difference in China GDP province vs national. I’d love to see a link or reference to where you supposedly were the first person to “identify” this. But, either way, I don’t think the observation that 3+3 probably did not equal 5 was regarded as that “deep” an observation.

            I forgot to ask you Mr. Rear, how’d that “advising on restructuring HK’s healthcare system” work out for you??? Did you really manage to keep a straight face when you typed that?? Was it the public or private version of HK healthcare you “advised” on?? I’d love to read your past writings on either.

            If you “influenced” HK’s healthcare system, after their handling of SARS (circa 2002, you were there, then, a red flag for another future pandemic that would originate in China about 20 years later) and Covid-19, it looks like pure ineptitude.





  2. ltr

    October 18, 2023

    Third Quarter data reveals China’s economic recovery gathering steam

    * The Chinese economy has sustained its recovery momentum with solid progress made in high-quality development in both the third quarter and the first three quarters of this year, official data showed Wednesday.
    * An array of other data released Wednesday underscored the gathering of steam by the world’s second-largest economy, despite lingering global and domestic headwinds.
    * The Chinese government is very confident of achieving the full-year economic growth target of around 5 percent.

    BEIJING — The Chinese economy has sustained its recovery momentum with solid progress made in high-quality development in both the third quarter (Q3) and the first three quarters of this year, official data showed Wednesday.

    China’s gross domestic product (GDP) expanded 4.9 percent year on year in Q3, and went up 1.3 percent over Q2. It grew 5.2 percent year on year in the first three quarters of 2023, according to the National Bureau of Statistics (NBS).

    An array of other data released Wednesday underscored the gathering of steam by the world’s second-largest economy, despite lingering global and domestic headwinds, consolidating the country’s confidence in being able to meet its annual GDP growth target of around 5 percent.

    Consumption, a mainstay of the Chinese economy, has seen a steady expansion with an 83.2-percent contribution to GDP growth in the first three quarters of this year.

    The country’s retail sales of consumer goods climbed 6.8 percent year on year during the period. This indicator also recorded growth in September with a 0.9-percentage-point rise compared to August, marking the second consecutive monthly increase.

    Specifically, the service sector has played a key role in boosting consumption thanks to growing contact-and-gathering-based activities after China downgraded its management of COVID-19 in January this year.

    In the first three quarters, per capita consumption expenditure on services accounted for 46.1 percent of total per capita spending of residents, a marked year-on-year increase of 2 percentage points. A travel boom during the just-concluded Mid-Autumn Festival and National Day holiday period further pointed to Chinese consumers’ growing willingness to spend.

    China’s fixed-asset investment went up 3.1 percent year on year in the first nine months of this year, and rose 0.15 percent month on month in September. Investment in high-tech industries stayed robust with 11.4-percent year-on-year growth during the first three quarters.

    China’s property sector, considered a major economic drag, is also showing signs of recovery following a slew of supportive policies.

    High-frequency data indicated a rebound in house transactions in major cities, and September credit statistics showed a month-on-month addition of over 100 billion yuan (about 13.69 billion U.S. dollars) in real estate development loans and individual mortgages.

    Recently many international financial institutions, including J.P. Morgan, Citibank and ANZ Bank, have lifted China’s full-year GDP growth forecast due to the growing body of optimistic data.

    The Trade and Development Report 2023 released by the UN Conference on Trade and Development earlier this month noted that China’s economy has picked up this year and will grow more than 10 times faster than the eurozone, remaining a major contributor to global economic growth….

    1. Macroduck

      She’s barrack!

      ltr’s job is to distract our attention from any truth which is inconvenient to Xi’s government. Menzie posts about the likelihood that Chinese growth is slower than official numbers suggest, so ltr does the Chinese thing*, denying the truth and favoring quantity over quality in the process.

      It was so nice, here in commentland, while ltr was being re-educated. Now that she has been indoctrinated with whatever the newest “almighty Xi” approved speech is in vogue, she’s bothering us again.

      *Cue “racism” accusations from ltr, who fronts for one of the world’s most racist regimes.

      1. ltr

        Menzie posts about the likelihood that Chinese growth is slower than official numbers suggest, so — does the Chinese thing*, denying the truth…
        Menzie posts about the likelihood that Chinese growth is slower than official numbers suggest, so — does the Chinese thing*, denying the truth…
        Menzie posts about the likelihood that Chinese growth is slower than official numbers suggest, so — does the Chinese thing*, denying the truth…

        [ Doing “the Chinese thing, denying the truth,” is a definitively racist accusation against 1.4 billion people. “The Chinese thing, denying the truth,” such is racism tragically expressed. ]

        1. Moses Herzog

          I think China has a cultural problem with lying, and the cultural issue may be caused by the same systemic issues I discuss above. I always try to think of good juxtaposed analogies to America (I did my damnedest to admit America’s problems with “my” University students in China). Maybe America’s problem with corporate tax evasion that pgl rightly points out. Certainly America has no shortage of lies. But two wrongs do not equal a “right”.

        2. pgl

          He said you would call him a racist. You really need to stop this revolting behavior. Everyone here know your game and it is disgusting.

    2. Macroduck

      China has committed an act of war against the Philippines in service of Xi’s quest for hegemony in the South China Sea:

      China is also expanding its nuclear weapons arsenal:

      ltr will probably tell us these is more sign of China’s excellent economic performance and of China “faring splendidly” in science and tech.

    3. ltr

      October 23, 2023

      Global brokerages lift China’s 2023 GDP forecast on upbeat Q3 data

      Global financial institutions, including JP Morgan, Citigroup and UBS, raised their 2023 growth forecasts for China last week after the country’s economy expanded at a faster-than-expected pace in the third quarter of 2023.

      China’s GDP rose 4.9 percent in July-September from a year earlier as the country’s recovery gathers pace, official data showed.

      Following the data release, Citigroup raised its China’s growth forecast for the second time in a month to 5.3 percent in 2023.

      JP Morgan forecasts China’s economy to expand 5.2 percent this year, up from the previous 5 percent estimate, while Morgan Stanley lifted its growth forecast to 5.1 percent from 4.8 percent to 4.9 percent previously.

      “Like August, September monthly activity came in stronger than expected. This is encouraging,” JP Morgan economists, led by Haibin Zhu, said.

      Swiss banking giant UBS has raised its estimate to 5.2 percent, 0.4 of a percentage point higher than previous estimates.

      Japan-based financial services group Nomura raised its China GDP growth forecast to 5.1 percent on positive signs, and lifted fourth-quarter growth expectations to 4.7 percent….

  3. ltr

    October 21, 2023

    China’s Q3 data shows 5 pct growth target “well within reach”: veteran China watcher

    WASHINGTON — China’s recently released economic data shows that a 5-percent year-on-year gross domestic product (GDP) growth is “well within reach,” a veteran China watcher said Friday.

    “The Q3 numbers just released do not support the downward economic spiral hypothesis, rather they support the view of a modest recovery from Q2 making 5 percent year-on-year GDP growth well within reach,” Nicholas Lardy, a senior fellow at Washington D.C.-based think tank the Peterson Institute for International Economics (PIIE), told Xinhua via email.

    China’s economy expanded 4.9 percent year on year in the third quarter, and went up 1.3 percent on a quarter-on-quarter basis. It grew 5.2 percent year on year in the first three quarters of 2023, according to the National Bureau of Statistics.

    Lardy, an expert on the Chinese economy, noted that the quarterly growth of 1.3 percent is almost two-thirds more than that of 0.8 percent in the second quarter.

    “Per capita disposable income continues to grow more rapidly than GDP per capita and per capita consumption continues to grow more rapidly than per capita disposable income — continuing trends of the first half that I identified in August as positive and counter to the increased saving/household uncertainty hypothesis,” said Lardy.

    China’s core consumer price index (CPI), which excludes volatile food and energy prices, went up 0.8 percent year on year in September. “Producer goods prices continue to fall, but at a slower pace. Little support for the deflation hypothesis,” said Lardy.

    The veteran China watcher also noted that private investment in the first three quarters fell by 0.6 percent about the same pace as earlier, but private investment excluding property grew at 9.1 percent, slightly below the 9.4 percent reported for the first half.

    Private investment excluding property continues to grow more rapidly than state investment, Lardy said, adding there is “little support for general private sector uncertainty slowing growth.”

    “Property investment continues to slow, which I regard as a good thing, a much needed correction,” he said.

    1. Macroduck

      ltr is doing a Johnny trick. She has found someone who has said something favorable to her position, and has copied and pasted the whole thing (thereby violating blog rules). What she has not done, and cannot honestly do, is rebuttal the point made in this post, which is that China has overstated it growth. The Lardy quote shows why China had to publish a bigger fib last time than this time – because the annual growth target is going to be published as a success, or very nearly so, at year end.

      Anyone else wanting to k ow the true state of the world should give considerable weight to alternative estimates of China’s growth.

      1. JohnH

        “So-and-so has found someone who has said something favorable to her position…” Per Tricky Ducky, academic papers, which do this routinely are evidently worthless…good to know. No more quoting Keynes, Samuelson, or Krugman!

        1. pgl

          academic papers are worthless? I guess you do not like Keynes, Samuelson, or Krugman because they are smart whereas little Jonny boy is stooopid.

        2. Macroduck

          Nice try, boy. You’re putting random quoted folk on the same level as Samuelson. Kinda proves my poin.

      2. baffling

        “She has found someone who has said something favorable to her position”
        let us not forget, the link is from the ccp propaganda site. not that xi would have anything biased from his own website. its kind of like linking to truth social and being surprised that it would be fawning over trump.

  4. ltr

    October 16, 2023

    Biden has taken a remarkably hard line on Chinese technology. Where Trump huffed and puffed ineffectually against Chinese trade surpluses (which were never the problem), Biden has imposed sanctions that the Center for Strategic and International Studies calls a “policy of actively strangling large segments of the Chinese technology industry — strangling with an intent to kill.”

    — Paul Krugman

    [ Imagine selected economists and national policy-makers who are so addled by prejudice that they boast about a persistent effort to undermine and halt the social-economic development of a wondrously beautiful 5,000 year-old civilization, a thoroughly benign civilization, of 1.4 billion. ]

    1. ltr

      China is faring splendidly, brilliantly in science and technology advance:

      The Nature Index

      1 June 2022 – 31 May 2023 *

      Rank Institution ( Count) ( Share)

      1 Chinese Academy of Sciences ( 7172) ( 2168)
      2 Harvard University ( 3516) ( 1100)
      3 University of Science and Technology of China ( 1757) ( 655)
      4 Max Planck Society ( 2438) ( 650)
      5 University of Chinese Academy of Sciences ( 3006) ( 618)

      6 French National Centre for Scientific Research ( 4276) ( 616)
      7 Nanjing University ( 1379) ( 596)
      8 Tsinghua University ( 1703) ( 587)
      9 Peking University ( 2114) ( 573)
      10 Zhejiang University ( 1334) ( 517)

      11 Stanford University ( 1827) ( 512)
      12 Helmholtz Association of German Research Centres ( 2458) ( 503)
      13 Massachusetts Institute of Technology ( 1918) ( 486)
      14 Sun Yat-sen University ( 1132) ( 456)
      15 Fudan University ( 1235) ( 450)

      16 Shanghai Jiao Tong University ( 1248) ( 427)
      17 National Institutes of Health ( 1134) ( 392)
      18 University of Oxford ( 1496) ( 388)
      19 University of Cambridge ( 1301) ( 383)
      20 University of Michigan ( 1221) ( 367)

      * Annual Tables highlight the most prolific institutions and countries in high-quality research publishing for the year

      1. JohnH

        Of course, pgl, who routinely misrepresents, misinterprets, and lies about what others say, can’t be bothered to explain what he imagines ltr got wrong about the Krugman piece…he prefers to just snark and insult without providing any basis or evidence for his probable misinterpretation!

    2. Macroduck

      A “thoroughly benign civilization” which enslavement Uyghurs, casually commits acts of war against other nations in disputes over a few acres of soggy land, threatens to invade Taiwan, lied about the freedoms it would provide Hong Kong Chinese, sells fentanyl precursor chemicals to drug gangs, builds more coal-fired plants than the rest ofthe world combined…

      I can go on, you know. Anyone with the slightest curioand a web browser can learn howfrim from “benign” China’s so-called “civilization” has become under Xi’s rule. Xi has engineered the greatest step backward for China since the Great Leap Forward.

      1. JohnH

        Now Tricky Ducky is all hot and bothered about China and fentanyl, which is pretty darned ironic considered what the US and major European powers did to China! But folks like Tricky Ducky can barely remember the Iraq War and US atrocities there, let alone something as remote as the Opium Wars!

        However, “The West May Have Forgotten The Opium Wars, But China Hasn’t…China will never its humiliation at the hands of the West.”

        Forgetting history, context, and causes and conditions is an essential part of the intellectual vacuum key to spewing propaganda.

        1. pgl

          “The British gave the East India Company a monopoly on trade with China, and soon ships based in colonial India were vigorously exchanging silver for tea and porcelain. But the British had a limited supply of silver.”

          Excuse me ignorant little troll but had you bothered to read just the first chapter of Dani Rodrik’s Economist Rules you might have noticed he opened his excellent discussion with this. Dani wrote clearly understandable if yet nontraditional discussion of how economics should be applied to the real world. Which is to say a Village Moron like JohnH would never understand what he wrote.

      2. Ivan

        What you can’t do is copy-paste from Xi’s lalaland of lies, cherry-picking and BS to present a white wash of a primitive brutal regimes subjugation of its own people – which is why I respect and read what you are posting.

        Cheers and thanks.

      3. JohnH

        “Afghanistan has long had a history of opium poppy cultivation and harvest. As of 2021, Afghanistan’s harvest produces more than 90% of illicit heroin globally, and more than 95% of the European supply. More land is used for opium in Afghanistan than is used for coca cultivation in Latin America. The country has been the world’s leading illicit drug producer since 2001.”

        Let’s see, what country occupied Afghanistan during this period? UW Harrington Professor Emeritus of History has documented decades of dalliance between US secret services and major drug producers. Did Tricky Ducky ever get hot and bothered by this? Of course not.

        It’s only when a drug connection to a country disliked by the US can be trumped up that the righteous anger of the propagandists gets stoked.

        BTW the Taliban banned opium production last year…to no propagandist’s applause!

        1. pgl

          I think we have finally figured out what you constantly write really stupid comment. Little Jonny boy is a crack head!

        2. Noneconomist

          JohnH cheers the Taliban. Pom Poms raised, he proclaims, loudly, “yay Taliban! Give me a T, give me an A…………

  5. pgl

    Face The Nation interviewed both Liz Cheney and Mitch McConnell. On the Ukraine and Middle East issues, both seemed to be praising Biden’s approach. Can you just imagine how angry Trump is about this?

    1. Macroduck

      Biden appointed David Satterfield as special envoy to the Middle East for humanitarian affairs 7 days ago. The timing is pretty obvious – this is about the harm to Palestinians from Israel’s war with Hamas.

      While this could simply be lipstick on a pig, Satterfield’s record suggests otherwise. His job is either to actually do something for the Palestinians, or to deal with governments in the region over their response to what’s happening to Palestinians. The first Is a good thing. The second is a necessary thing, but not necessarily good.

      Since I have heard anything associated with Satterfield suggesting an effort to do anything for the Palestinians associated, I’m guessing that, for now, his job is to deal with regional governments.

  6. Macroduck

    Salon has rounded up a host of quotes from economists, all saying essentially “Of course I don’t trust China’s official statistics. They’re doctored to look good.”

    The title makes the point that, since the Chinese are mostly required to base their official analysis on official data, the Chunese are benighted about the state of affairs in their own country.

    Moses? Your take?

    1. Moses Herzog

      I think the Salon article has many good points, although on “first glance” it could appear overly negative. I’m going to give you my best answer later today, this Sunday night. I hope Menzie can break his rule about me posting YT links, and put this up.
      As I feel this article between Jewish Fama and Asian Andrew Lo. describes the feeling between me and “Laoshi Fang” when he came over to have beers and Snickers chocolate bars, in my University dorm apartment, waiting for the university bus to take him back home. I remember our conversations fondly (as he gave me more knowledge than I gave him)

    2. pgl

      In the end, the Party would announce that two and two made five, and you would have to believe it. It was inevitable that they should make that claim sooner or later: the logic of their position demanded it. – George Orwell, “1984”.

      Could this be why Jonny boy sucks at basic arithmetic. He has been ordered to make errors in the name of Putin and Xi.

      1. JohnH

        Hmmm—not adding up? You mean like GDP and GDI…which ostensibly measure the same thing…but can’t seem to agree?

        1. pgl

          Like how Jonny boy told us that falling real compensation was why real GDI was not rising as fast as real GDP. Oh wait – BEA noted real profits fell while real compensation was rising.

          A big thank you to my mentally retarded stalker for reminding us that Jonny boy gets everything wrong.

    3. JohnH

      There Tricky Ducky goes again…in one comment criticizing someone who cites knowledgeable experts to bolster his case…in another comment dredging up some mostly unnamed economists to bolster his case. Standard propaganda technique…

  7. ltr

    Here we find the last 45 years of Chinese development, a wonderful accomplishment of which has even been the ending of severe poverty for the 1.4 billion:

    August 4, 2014

    Real per capita Gross Domestic Product for China, United States, India, Japan and Germany, 1977-2022

    (Percent change)

    August 4, 2014

    Real per capita Gross Domestic Product for China, United States, India, Japan and Germany, 1977-2022

    (Indexed to 1977)

  8. David O'Rear

    The Salon article is quite correct.

    With varying degrees of nuance, no one really believes Chinese economic data. When you discuss the subject with other economists focused on China, there will arise some views about which data might be useful (e.g., retail sales) – not accurate, but useful – and which are just fluff (unemployment, inflation). And, that’s before we even get to regional differences.

    Nevertheless, it is an ignorant fool who would argue that China has not raised the standards of living of its people extremely sharply over the past half century. Even if we cannot accurately quantify it, the fact still exists, as evidenced by the Mark I eyeball-on-the-ground.

    We’ve had a very large amount of regularly published statistics for about 30-40 years, and there are very good reasons to believe the quality has improved. But, no one with a shred of experience or integrity would stoop to claiming the data are good enough to build an econometric model.

    Hence, my practice of discussing what the statistical agencies report, rather than saying things like “the economy grew.”

    After all, there really aren’t a whole lot of reasonable alternatives.

    (By the way, electricity usage can be hugely affected by taking an aluminum plant out of service, or allowing the emergence of crypto server farms.)

    1. Moses Herzog

      Yeah Mr Rear, we “get it”, you get your salary based on, if you say “Chinese government agencies statistics are great and very accurate!!!!!” We got what your bread and butter is.

      Marked and checked. The HK and Chinese government love you Mr. Rear. They love you so much.

  9. Macroduck

    Austen and Emmer are the only two of the eight candidates for the House Speakership who did not vote to overturnthe legitimate results of the 2020 presidential election:

    McCarthy, Jordan and Scalese all voted to overturn Biden’s win, by the way.

    When McCarthy blames Democrats for his removal from the Speakership, the fact that he tried to prevent Biden from being sworn in as President ought to be born in mind. Good for House Democrats.

  10. Macroduck

    It’s on:

    Israel is testing Hamas responses. Don’t know the next step, but then the next step probably depends on how Hamas responds to initial contact.

    Hezbollah has let Israel know that incursion into Gaza will lead to a second front along the Lebanon-Istael border. There has been an incursion.

    Back before the U.S. decided that war was preferable to policing when it comes to terrorism, we had a choice. We could have hunted down the leaders of al-Qaeda without engaging in war, killing thousands, destabizing a region and loosing legitimacy. In the end, we had to hunt down al-Qaeda’s leaders antway, and engaged in TWO wars.

    Israel, faced with the same choice, is making the same bloody-minded decision. What idiots these chest-thumping politicians are. And there’s George Bush, finally out of his spider hole, egging Israel on toward war:

    1. pgl

      Uber hawks Liz Cheney, Mitch McConnell, and now George W. Bush all praising Biden? Look – I hope Biden can pull off a two state solution in the long run but being praised by the uber hawks makes me uncomfortable.

    2. Ivan

      Unfortunately Hamas has Bibi in a trap. He cannot avoid going into Northern Gaza and he cannot avoid huge loses when he goes there.

      The advantage of having armored vehicles is minimal when the enemy has mines and person carried missiles that can blow those vehicles to pieces. That is why Ukraine has relegated tanks to second level duty at the front. Even back in 2005 when Hamas didn’t have such weapons, Israel decided it would be too costly to invade. Now the cost could easily run into loses of over 10K soldiers without much of a chance of dislodging Hamas from power.

      That is the real reason Israel has not yet gone into Gaza; its going to be a blood bath – on both sides.

  11. Macroduck

    Off topic, 10-yrar Treasury yield

    There was a jump in long-end Treasury yield at the end of last week. Here’s a disaggregation of the Treasury 10-year yield, excluding cost of funds:

    What we don’t have yet is term premium estimates for the past week, but that looks like where the jump in yields has come from. That’s where supply news and portfolio decisions show up. Supply is obviously an issue, but I’m not aware of any supply surprises in the past week.There was notable curve steepening on Friday, suggesting duration is out of fashion. It could be something as simple as a dealer shedding long paper to make room for more. If that’s the case, we should see some curve flattening Monday.

    Now, about the cost of funds. If you check the pricing of fed funds futures for December 2024, it has actually firmed up ever so slightly over the past week, despite the mostly “wait and see” talk from a bunch of Fed speakers this past week.

    That slight firming in rate expectations isn’t enough to account for the rise in 10-year yields. Gotta look elsewhere for an explanation.

  12. Ivan

    If you want to know “How did solar energy become the ‘cheapest energy source in history’”, this is a great article.

    And that incredible record low $40 per MWH is predicted to be cut in half in less than a decade. What will $20 per MWH mean for the economy? For developing countries who can skip those steps of building $100 per MWH fossil plants and go right for the cheep stuff to build up their economies and societies?

  13. Bruce Hall

    Some news about/from China. It’s a different world from the 90s and 00s:

    Gavin Newsom Gets Rave Review From China
    Nick MordowanecOct 23, 2023 at 11:56 AM EDT
    California Governor Gavin Newsom is receiving praise from a Chinese publication that has previously berated officials and politicians from the United States.

    On Monday, Newsom began his seven-day trip to China, with the backdrop of climate change as topping the agenda. He is scheduled to visit Hong Kong, Shenzhen, Guangzhou, Beijing and Shanghai, as well as the province of Jiangsu.

    A new editorial published Monday by the Global Times, a nationalistic English-language tabloid published by the propaganda department of the ruling Communist Party, states that Newsom is one of the most esteemed U.S. officials to make the journey overseas—citing the governor’s first trip there as one of pragmatism as the U.S.-China relationship overall has been one of angst and vitriol in recent years.
    — Newsweek; Oct. 23, 2023


    China has stolen more personal and corporate information than every other country in the world combined, FBI director says
    Kwan Wei Kevin Tan
    Mon, October 23, 2023 at 5:33 AM EDT

    FBI chief Christopher Wray says China is running the world’s largest hacking program.

    He told 60 Minutes that China has stolen more US data “than every nation, big or small, combined.”

    Wray said China’s espionage work could threaten the competitiveness of the US economy.


    Mood swing: Global producers in US hunt for China alternatives
    Mon, October 23, 2023 at 6:07 AM EDT

    By Timothy Aeppel

    (Reuters) – Jason Andringa’s company was part of the stampede of U.S. businesses that built factories in China.

    Iowa-based Vermeer, a 4,000-employee maker of industrial and farm machinery, opened a plant there two decades ago—and Andringa, the company’s president and CEO, frequently visited what many be considered the world’s premier fast-growing, future-oriented economy. But the mood of Vermeer and many other global producers has turned sour on China.

    “If we didn’t already have a plant in China, we sure wouldn’t start one now,” he said.

    He has no plan to leave and is pleased with the operation, but said he would not expand there given the tensions in the U.S.-China relationship that seem more likely than not to escalate. He worries it could be increasingly difficult to find employees and receive fair treatment in a country that is mutually antagonistic with the U.S.

    The latest example of that hit Tuesday, when the Biden administration said it plans to halt shipments to China of more advanced artificial intelligence chips designed by Nvidia and others. The move is aimed at curbing Beijing’s access to cutting-edge technology that could be used in weapons.

    Surveys now show U.S. business leaders are eager to cut back their China exposure and are shifting investment to other, friendlier countries. This is a radical shift from the days when offshoring production to China was rewarded by Wall Street and investor calls often highlighted multi-million-dollar expansions in the world’s second-largest economy.


    Apple iPhone maker Foxconn being investigated in China as founder runs for Taiwan presidency
    Mon, October 23, 2023 at 5:43 AM EDT

    Taiwan’s Foxconn, one of Apple’s largest suppliers, is being investigated by authorities in China, according to state media.

    The probe comes weeks after founder Terry Gou announced his bid for Taiwan’s presidency and stressed that he won’t be pressured by Beijing, despite his extensive business operations in the country.

    While it is unclear whether the investigations are connected to Gou’s entrance into the presidential race, analysts said the move will send jitters through foreign businesses in China.


    South China Sea: Why the Philippines and China are on a collision course
    Rupert Wingfield-Hayes – BBC News
    Mon, October 23, 2023 at 6:55 AM EDT

    Take a close look at a video of Sunday’s “collision” between a Philippine coastguard ship and a Chinese maritime militia vessel in the South China Sea.

    As the stern of one bumps the deck of the other, right in the middle of the frame is a Filipino television crew scrambling to get what in the business is called an “action piece to camera”.

    The confrontation between Manila and Beijing over submerged shoals in the South China Sea has been going on for decades.

    But in recent months something has changed. The spats at sea are now unfolding in the full glare of the television media. This is the second time in weeks Philippine journalists have filmed a close encounter near a particularly sensitive reef known variously as Second Thomas Shoal, Ayungin Shoal or Ren Ai Reef.

    This is no accident. It is part of a deliberate policy by the Philippine government to shine a spotlight on what it has called China’s “brute force” in asserting control over what Manila says are its waters.

    “I think we’ve seen a significant change this year. It’s what I call an assertive transparency campaign,” says retired Colonel Raymond Powell of Stanford University’s Gordian Knot Centre.

  14. pgl

    “California Governor Gavin Newsom is receiving praise from a Chinese publication that has previously berated officials and politicians from the United States.”

    This is Brucie boy’s hit job? That someone in China has recognized that Newsom is a real leader as opposed to that complete incompetent who served as POTUS 45.

    Come on Brucie – this is not going to impress Kelly Anne. ,

    1. Noneconomist

      China is the third largest export market for the states of California and—wait for it—Michigan. In California, exports to China trail in value those to Mexico and Canada. In Michigan to Canada, then Mexico.
      Employment in in exports both states—much of it dominated by small businesses—is obviously buoyed by international trade.
      Newsom in China. Problem?

      1. pgl

        You have to remember that Trump fanboys like Brucie boy cheered that stupid 2018 trade war. After all Trump told his fanboys that goods made in China are all crap. Trump should know as those Trump suits he charged a lot of money for are all made in China.

      2. pgl

        US$30.8 billion (16.6% of California’s total exports)

        California’s exports by nation:

        Mexico: US$30.8 billion (16.6%)
        Canada: $20.1 billion (10.8%)
        China: $18.2 billion (9.8%)
        Japan: $11.61 billion (6.3%)
        South Korea: $11.58 billion (6.2%)
        Taiwan: $10.4 billion (5.6%)
        India: $6 billion (3.3%)
        Hong Kong: $5.6 billion (3%)
        Singapore: $5.2 billion (2.8%)
        Malaysia: $3 billion (1.6%)

        1. Noneconomist

          Comments from 10/25 Sacramento Bee:
          Newsom and Xi discussed climate change, human rights, fentanyl, and the importance of strengthening US-China relations.
          “When reporter Elix Michaelson of Fox LA asked Newsom what California was getting out of his international trip the governor said ‘more
          Tourism, more two way trade, and more economic development.’”
          Prior to going to China, Newsom also met with Benjamin Netanyahu in Tel Avov.

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