As always, there is the attempt to put a brave face on what is shaping up to be the worst year yet. China’s ‘big 3′ economic data were all disappointing in the context of what the last ‘brave face’ was supposed to suggest – where weakness at the start of the year was only due to ‘global turmoil’ and would quickly recede. Instead, industrial production stayed at 6% while retail sales expanded at only 10%, matching the worst growth rate (April 2015) of the last ten years.
The real problem, however, is as noted last month: fixed asset investment. FAI was the heart of both the Chinese ‘miracle’ as well as the government efforts to deal with the fallout from its curious end coincident to the eurodollar system’s. The latest figures are suggesting a growing disaster. Total FAI, which includes fiscal activities (‘stimulus’), grew by just 9.6% in the January to May period (the National Bureau of Statistics reports FAI in accumulated totals). That was the first rate below 10% since December 2000!
For just the private economy, the accumulated growth rate was 3.9% in the first five months of 2016, down sharply from 5.2% in the four months including April and 10.1% for 2015 as a whole. By my calculation, private FAI in May was up just 1.0% from May 2015 leaving the Chinese economy careening toward disaster.
The mainstream is finally acknowledging the precarious state of Chinese fortunes but once again being careful to ‘balance’ it all out with hopes placed squarely upon consumers.
This post was published at David Stockmans Contra Corner on June 13, 2016.
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