Even More Evidence of a China Hard Landing
The latest container shipments into the port of Los Angeles and Long Beach confirm that China (and Asia) is no longer nearly as much in the game. Inbound is down 10% from last year and 20% from the same month in 2007. I do think a little marginal production has shifted to the US, but it isn’t really showing up in the data, as rail car traffic in the US is now down 1% YoY. Fed Ex says it will “reduce flight hours, and “park some planes” according to headlines on Bloomberg. It also sees weakness in tech, mobile phones, finance, insurance, and real estate, and it also anticipates below-trend growth.
Incredibly the “sistema” is being pulled out round the clock to circle the wagons explaining how China is just fine. The truth is that China has been in steady deterioration for over a year. The problem with China lies in its overcapacity, which so severe that a mere “slow down” is not possible. Since fixed asset investment is far more than this economy needs, when this falls it falls big, which is exactly what is happening. Do the following charts look like a soft landing 7% GDP growth scenario to a thinking person?
The myth is that the Chinese consumer can pick up the slack. Cement and steel production would be a function of housing construction activity and local vanity projects.
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