Economists setting their expectations for China and PBOC ‘stimulus’ should have been paying attention to retail sales; not Chinese retail sales, butAmerican. They keep seeing a rebound that just doesn’t exist. US consumers, as the central marginal marketplace for the world economy of goods, have steadfastly refused the invitation of the unemployment rate to produce a worldwide economic resurgence. While mainstream expectations are set as if US labor market data is meaningful for that future, everything about current spending and production (globally) shows them devoid of any significance at any time.
In mid-April this year, for example, Chinese industrial production for March was figured to have accelerated to 6.8%. The level of growth wasn’t the reason for enthusiasm, as nearly 7% is itself unusually low for China. Instead, what got economists excited was how favorably it compared to the alarmingly low 5.4% despair of February. Rather than seeing the US economy for what it was and has been, and thus what the Chinese economy actually was and is, deference remained strong for orthodox policies despite what they had not achieved anywhere.
Friday’s growth report revealed China’s aggressive monetary stimulus was finally bearing fruit, Jing Ulrich, managing director and vice chairman for Asia Pacific at JPMorgan Chase, told CNBC’s ‘Street Signs.’
‘Data from the investment-industry nexus show that the tried-and-tested stimulus measures of recent months have stirred up the physical part of the economy, especially towards the end of Q1, while consumption remained relatively robust,’ Louis Kuijs, head of Asia economics at Oxford Economics, echoed in a note.
This post was published at David Stockmans Contra Corner on August 12, 2016.
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