Updated WTF Wednesday: Chinese Industrial Production

Update: Caixin says its all seasonal effects.

The sharp jump in March’s industrial output growth (8.5% YoY) shouldn’t be over-emphasized — seasonal factors, in part due to the timing of the Lunar New Year holidays, likely account for much of the increase. If we take the January-March period as a whole, industrial production expanded at a more modest 6.5%.

If this is the case, there is no Chinese recovery coming because the PBOC is taking the punch bowl away.

Caixin: Central Bank Refocuses on Keeping Money Supply Under Control

China’s central bank has emphasized the importance of keeping growth of the money supply under control as the economy has improved, dimming market expectations that it will soon cut the amount of money banks have to hold in reserve.

...The emphasis on keeping the money supply under control means that implementation of monetary policy is going to tighten marginally, Ming Ming, an analyst with Citic Securities Co. Ltd., said in a note on Tuesday.

Original post: China's NBS website is very slow and buggy today because everyone is trying to check their economic data. I cannot even load the page showing industrial production after trying for over an hour. There is a lot of attention on all the data, but the only one that matters is industrial production. It was far out of line and out of trend.

NBS: 2019年3月份规模以上工业增加值增长8.5%

First look at what is still contracting: autos, industrial robots, power generation and smartphones.

The 3.4 percent drop in auto production in March was a great improvement from February's drop:

What went higher? Cement exploded:

Nuclear and hydropower soared:

Here's a bunch more categories that pulled the IP number higher in March:

What does it mean?

Some immediately said fake data, but I don't think so. They had better reason to fake this number many times before and didn't.

If you have total faith in China as a market based economy, IP may signal a major turn for the Chinese and global economy. Maybe the depression is over and the global economy has turned the corner.

China's credit explosion in January, to the tune of 5 percent of GDP, finally hit. This is a big spike, but they'll spend the rest of the year tightening and dealing with the secondary and tertiary consequences.

Chinese industry expects a favorable trade deal with the USA that will unleash pent up demand for Chinese exports. What makes the IP number stick out most to me is the March imports, down 7.6 percent yoy in dollars. The economy didn't boom the way industry boomed in March.

Finally, if spiking exports and industrial production amid falling imports doesn't change, it indicates China is sticking with a development model 10 years past its sell date. Even if it drives a recovery, it's 2016 all over again, and worries of global recession will be back in 2021 with all the underlying problems worse than before.