1/6
November's economic data continued to weaken even faster than expected. Industrial output rose 2.2% year on year, well below expectations, but even that was good compared to retail sales, which fell 5.9%, also well below expectations.
reuters.com
November's economic data continued to weaken even faster than expected. Industrial output rose 2.2% year on year, well below expectations, but even that was good compared to retail sales, which fell 5.9%, also well below expectations.
reuters.com
2/6
We still have one more month left in the quarter, but it's pretty clear that Q4 will turn out to have been terrible for the Chinese economy. After several months of weak output growth and much weaker consumption growth, it is clear that the economy is struggling.
We still have one more month left in the quarter, but it's pretty clear that Q4 will turn out to have been terrible for the Chinese economy. After several months of weak output growth and much weaker consumption growth, it is clear that the economy is struggling.
3/6
But bad as that it is, what really matters is that the economy is also getting even more seriously unbalanced. The November results alone could lower the consumption share of GDP by as much as 30 bps.
But bad as that it is, what really matters is that the economy is also getting even more seriously unbalanced. The November results alone could lower the consumption share of GDP by as much as 30 bps.
4/6
That's a huge increase and it means that China has to rely even more on its trade surplus and on domestic investment to resolve weak domestic demand.
That's a huge increase and it means that China has to rely even more on its trade surplus and on domestic investment to resolve weak domestic demand.
5/6
Of course because the private sector has no interest in expanding investing in an environment like this, "domestic investment" really means even more local-government spending on infrastructure and (perhaps) a partial revival of the property sector.
Of course because the private sector has no interest in expanding investing in an environment like this, "domestic investment" really means even more local-government spending on infrastructure and (perhaps) a partial revival of the property sector.
6/6
This matters because it means the hidden costs associated with China's highly unbalanced growth are rising, and these must be resolved one way or another in the future. The longer this goes on, in other words, the more difficult China's ultimate adjustment.
This matters because it means the hidden costs associated with China's highly unbalanced growth are rising, and these must be resolved one way or another in the future. The longer this goes on, in other words, the more difficult China's ultimate adjustment.
Loading suggestions...