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More worrying data from China

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More worrying data from China

Industrial output increase disappoints.

Data released today adds to the growing sense that China’s economy is cooling off.

While it may seem odd that today’s official government announcement of industrial output growth for January and February was “only” 8.6% higher than last year, the figure must be kept in context.  That is the lowest rate of growth in nearly five years.

For instance, a recent Wall Street Journal poll of economists had expected year-on-year growth to be 13.5%.

"China’s multitude of demographic challenges, it’s increasingly shaky banking sector and massive fraud and government waste require gaudy growth to compensate for these problems."

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In addition, retail sales – while robust by developed-country standards at 11.8% - are at their lowest rate of growth since early 2011.

Again, these numbers seem gaudy from a Western economic perspective, but China’s multitude of demographic challenges, it’s increasingly shaky banking sector and massive fraud and government waste require gaudy growth to compensate for these problems.  That growth appears to be slowing down rapidly.

As one Shanghai economist was quoted as saying, the data “is a mess.”

 

 

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