Real China Economy

The objective of the Real China Economy Blog is to provide insight and discussion of Chinese economic data without the bias of the Chinese government or Wall Street investment houses.  The host of Real China Economy is George H. Baxter the manager and CIO of Baxter Investment Management, LLC.   

The Bias of the Chinese Government

The Chinese government is largely an unchecked authoritarian power (unlike a democracy where leaders must periodically face the voters) with an immediate objective to stay in power (like all governments).  Because the Chinese government cannot be thrown out of power by the vote of its citizens it can take liberties with public information for the purpose of directing behavior without the threat of serious reprisal.   The Chinese government seeks to maintain domestic harmony so that the current social order remains intact.  To do this, they must continuously generate economic growth in order to provide jobs for an endless flood of migrant workers from the rural inland to the industrial coastal cities.   This requires investment and investment requires capital.   Capital is attracted to economic growth.   Therefore, the Chinese government tries to continuously provide evidence of economic growth through official government statistics.   

The Bias of the Wall Street

Wall Street is interested in selling investments to its clients.  China provides them with “official” statistics that document growth.  Wall Street can then pitch the wonders Chinese securities based on official data.  Optimistic projections based on Chinese economic data facilitates Wall Street’s sale of paper and generates profits derived from commissions.  Investors do not like to buy during circumstances of deteriorating fundamentals.   Because the Chinese can provide Wall Street with a perpetually positive economic outlook which translates into sales, Wall Street is a perfect willing conspirator in the dissemination of “official” Chinese statistics to attract capital to spur Chinese employment growth.

Real China Economy tries to sort through Chinese economic data without the Wall Street bias to determine the true state of the Chinese economy.

About Mr. Baxter

Mr. Baxter has over 20 years of experience investing in publicly traded equities.   He is an expert in strategic analysis and has authored nine books and numerous articles on strategic gaming.   Prior to founding Baxter Investment Management, LLC, Mr. Baxter practiced law as a private equity attorney for Weil, Gotshal & Manages where he specialized in Mergers and Acquisitions.