China Unbalancing As Recession Hits Services; Industrial Support Courts Disaster

From October 2015: Chinese Recession Ready to Move Into Services. Recessions typically begin in the higher stages of production, such as mining and manufacturing, and spread to the lower stages over time, with retail and consumer sectors hit last. The bigger question, which looks to be answered in the affirmative, is whether as manufacturer to the world, the slowdown in China's industrial sectors heralded a global recession. For now though, those hoping for a services led recovery in China are out of luck.

FT: China’s rebalancing paradox hits home
A recent pledge by government ministries to support industry extolled the sector as “the backbone of the real economy” and “the main battlefield for stabilising the economy”. Infrastructure and real estate — two key drivers of demand for industrial goods — were the biggest beneficiaries of January’s lending boom, which has reportedly continued into February, according to banking sources of FT Confidential Research, a unit of the Financial Times.

Such moves to support industry should not come as a surprise. China has no option but to resuscitate its industrial sector, as FTCR argued last year.

Why? Because China’s industrial-led slowdown is also leading to slower growth in consumer spending and service sector activity.
Here's a look at some companies that make popular brands of snacks, instant noodles and drinks:
No surprise. The FT article goes on to say the slowdown is hindering rebalancing instead of hastening it. This is due to the government still refusing to accept the pain caused by a real rebalancing. It is why I believe the ultimate end game is a massive devaluation in the yuan.

It will also drive the world closer to a trade war. The scenario laid out in The Logic of Strategy: Yuan Devaluation and the Road to Trade War is coming closer to reality with each passing day. The Trump campaign is a nationalist campaign and it heralds the end of existing trade deals. Trade agreements will be renegotiated or scrapped under a President Trump.

MUST LISTEN: Stephen Miller Makes Case Against Marco Rubio in Epic Rant. The key portions are where he talks about sovereignty and opposition to trade deals. Trump will either get better deals on NAFTA and with China, or NAFTA and the WTO will die, to thunderous applause in America.

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