China Slowing

Alhambra: The Chinese Have Their Own Policy ‘Dots’

Industrial Production, for example, increased just 8.8% year-over-year last month. The 2-year change, factoring out base effects, works out to the same lackluster 6.5% Chinese industry had been stuck with for years – the same lack of growth which had led Xi to make his radical change to economic plans in the first place (19th Party Congress). And that’s with a whole bunch of “transitory” 2020 boosts to industry.

...Retail Sales are substantially more concerning, which otherwise you’d think authorities would be ramping up their “stimulus” efforts given how they’ve made China’s consumers the priority of whatever “quality” growth might be achieved. Yet, again, no. The “quantity” growth in consumer spending since last year’s deep recession pales.

According to the NBS, retail sales in May 2021 increased only 12.4% when compared to May 2020 when overall sales had been 2.8% less than in May 2019. The 2-year (compounded annual) change in retail sales, therefore, less than 5% for eight out of the past twelve months. Even those other four the 2-year change had been only near 6%.

M2 credit growth seems to have stabilized, but it isn't in an uptrend.