THE Chinese economy has earned a reputation as a slow starter. In 2012, 2013 and again last year, it was sluggish out of the gates, fuelling concerns that much worse was to come. In each of these years, though, the government stepped in, boosting investment and easing monetary policy to keep growth on track. So the worse-than-expected data for the first two months of 2015, published on March 11th, bring more than a little sense of déjà vu. But there are also important differences.
Worryingly, the weakness is broader than in previous years. Almost all main indicators are pointing down. Investment rose by 13.9% on a year earlier, the slowest in more than a decade and down from 15.7% last year. Industrial output increased by 6.8%, the slowest since the global financial crisis. In December it had grown by 7.9%. Retail sales also slowed, a disappointing sign for the emergence of consumption as a driver of growth. Even more alarming was the property market, which in the past has driven as much as 15% of growth. It is now at risk of becoming a drag. Home sales fell by 16.3% year-on-year in volume, and new property starts were down by 17.7%.
The policy environment has also changed. Xi Jinping, China’s president, has spread the gospel of a “new normal”, by which he means that the government should place less emphasis on GDP and instead pursue structural...Continue reading
No comments:
Post a Comment