The slowing of the Chinese economy is now an indisputable fact. The official figures for quarterly GDP growth, shown in Table 1, indicate that from nearly double-digit growth a year and half ago, China is now growing at 7.5 per cent year-on-year. That may be an overestimate, and other indications suggest it may go lower yet. Much attention has focused on the figures for China’s exports; as a highly export-dependent country, the weakness of the world economy has meant anaemic export growth, dropping from 37.7 per cent year-on-year in February 2011 to 2.7 per cent in August this year, as Table 2 shows.
Unsurprisingly, growth in industrial production, as measured by the year-on-year growth rate in the industrial production index in Table 3, has fallen steadily in response. Nor are there hopes for a quick recovery of manufacturing, according to the purchasing managers’ index in Table 4; a revival above 50 (an increase in sentiment) has fallen away, and the index is back below 50 now.
Meanwhile, domestic consumer demand in China does not seem to be able to pick itself up enough to replace export demand. One indication many see of this problem is domestic automobile sales, which have tailed off, as is visible in Table 5. Only if the government can stimulate consumer demand can the economy recover.(Click here for tables)
The effect of China’s slowdown on asset and commodity prices is marked. Domestically, China’s real estate has slumped, as Table 6 shows; a value of over 100 for the real estate climate index indicates “good or improving health” of the market, and it has steadily dipped well below 100. Finally, as Table 7 shows, the price of both iron ore and finished steel has taken a hit in response to the industrial slowdown.
