China is Not Growing at 5%

The headline 5% Chinese GDP print is a political fabrication masking a severe, ongoing balance sheet recession characterized by contracting private investment and stagnant household demand. The critical second-order effect is that Beijing is relying entirely on overproduction and rerouting exports to non-US markets to maintain employment, meaning China is actively exporting deflation and aggressively undercutting global manufacturing competitors. Markets pricing in a stabilized Chinese macroeconomic environment are mispricing the severity of the private sector deleveraging cycle.