CDT Money: Earnings Season Marred by Cloud of Fraud

A preliminary measure of manufacturing activity painted a stabilizing picture of the Chinese factory sector this week, though concerns persist over potential export weakness as a trip by Wen Jiabao brought Europe back to the forefront. HSBC’s flash purchasing manager’s index (PMI) for April posted its best reading of the year, recovering from 48.3 to 49.1 and reversing March’s four-month low. While the number failed to eclipse the 50 level, which would have marked a movement into expansionary territory, the improvement strengthens the belief of some analysts that China’s economic growth has bottomed out and begun a modest recovery. The director of China’s State Information Center, for one, said last weekend that he expected China’s GDP growth rate to stabilize in the second quarter before rebounding to 8.5% for 2012. Other economists believe China’s growth will rapidly pick up, including Tang Jianwei at the Bank of Communications: “Growth will rebound in the second quarter. The chance for a hard landing is slim,” said Tang Jianwei, an analyst at the Bank of Communications. “The economy will keep a reasonable growth rate as long as the government properly handles its macroeconomic control measures,” he said, forecasting growth of 8.6, 8.7 and 9 percent, respectively, for the next three quarters. Tang said he expects export growth to recover in the second quarter, as export orders have increased amid an improved global economic outlook. The Bank of Communications also published a report predicting that China’s inflation rate would ease in April to 3.3 percent, down from 3.6 percent in March on the back of slowing growth in food prices. Otherwise, focus turned to Chinese corporates. Many of China’s public companies reported their results for the first quarter, results which indicate that the Chinese economy may have not bottomed out yet after all.  More than ...
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