There is no bottom in sight yet for China. Despite five interest rate cuts and traditional interpretations of monetary ‘stimulus’, the economy continues to decelerate beyond mainline understanding. Industrial production was just 6.1% in August, marking the thirteenth consecutive month (counting January, which is combined with February due to China’s New Year) below 8%, while retail sales rose 10.8%. Fixed Asset Investment, perhaps the key economic figure for China as it includes the real estate bubble, was the lowest growth rate since December 2000.
Growing evidence that the world’s economic powerhouse is slowing down has caused major investment market falls.
Other indications that the economy is weakening can be seen in falling car sales and lower imports and inflation.
Chinese manufacturers cut prices at their fastest pace in six years, largely on the back of a drop in commodity prices, which have dropped sharply over the past year as demand from China faltered.
Earlier this month, The National Bureau of Statistics reported a PPI of -5.9%. That is nearly as bad as the worst months during the Great Recession and already appreciably worse than the whole of the dot-com recession (which was likewise global). In fact, as noted last month, China’s producer price ‘deflation’ lines up a little too closely with global recessions. In that respect, even the grudging acknowledgement in the mainstream of what all this means understates the nature of both its severity and, worst of all, how this continues to linger month after month.
This post was published at David Stockmans Contra Corner By Jeffrey P. Snider ‘ September 14, 2015.
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