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Growth Rate China Slowest in 18 Months

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You know when you want to read that last page of the book just before you fall off into the Land of Nod and the Sandman comes and sandbags you to fall asleep? Or, when you really battle to keep your eyes open when you’ve paid for that seat at the theatre and the only thing you could do to stay awake is pop a couple of matchsticks in your eyeballs to keep them open? Well, it’s a bit like the China story over the slowdown in growth. Yawn! Yawn! It’s almost as boring as the US deficit. It’s there, nobody cares, because we will find a way out of it like printing money, taking over a country to exploit their oil or just laying the workers off so that we can save a dime or two. For the Chinese it’s the same. The West mainstream media revels in the scare-mongering tactics of telling us, ‘shock, horror; have you seen how bad the growth in China is today?’. We’ve been hearing it for years and it still seems to be way better than anything they can write home about in their own back yards in the USA.

So, China’s growth rate is the slowest it has been for the past 18 months in the first quarter of 2014. So, the Chinese government may not reach their target of growth for this year set at 7.5%. So, there was a drop from 7.7% in Gross Domestic Product in the last quarter of 2013. So, in comparison with last year there has been a year-on-year increase of 7.4%. It’s a lot better than some were predicting, hailing a massive drop to 7.2%. That was wishful thinking by the West, wasn’t it? Less for them and more for us? Errhhm, maybe that’s the way it went in the past. But, it hasn’t been MOAR for the West for a long time now. Less for China will just mean more for other countries like India or Russia or Brazil.

Chinese industrial production increased last month by 8.8% year-on-year. That was above the Februaryfigure of 8.6%. Economists had been targeting a 9% increase. Isn’t it always funny that the figures that are provided are always forecast lower than they really are for growth and yet higher than they ever could be for industrial production? You don’t have to look very far as to why.

Retail sales for China grew by 12.2% in March year-on year and in February that growth stood at 11.8%.

The big difference with the stimulus plan that the Chinese state is implementing and the Quantitative Easingof the Federal Reserve is that the latter just printed money aimlessly that took flight as far as it possible could from the USA to emerging countries to make the investment bankers richer. The Chinese are putting their money into projects including spending on railways and support for small companies. Say what you will, but if the Federal Reserve had had the common sense to invest at home rather than throwing the money to the banks, then we wouldn’t be in the sorry state that we are now. We might have actually improved the US industrial sector, given jobs to people and boosted the growth of the economy. The Chinese in their mini-stimulus will provide:

Tax-breaks for small and micro companies (extended until 2016).
6.6 thousand km (4.1 thousand miles) of new railway (an increase of 1 thousand on 2013’s figure). Yes, massive engineering projects will boost their economy and increase employment and at the same time better infrastructure.
• A railway fund will be created of 200-300 billion Yuan ($32-48 billion) every year for development projects.
• There are plans to boost domestic consumption and employment (to be announced later in the year).

It’s not a patch on the $586 billion that was invested in the economy to stimulate it in the aftermath of the financial crisis. Of course China’s growth is slowing down. It’s an economy that is out of the dizzy stages of youth and now entering maturity. It would be impossible to sustain growth of the levels that were experienced in the period prior to the financial crisis.

Why should we expect more from them when we are doing nothing for ourselves?

Originally posted: Growth Rate China Slowest in 18 Months

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Thu, 04/17/2014 - 19:39 | 4671336 Jam Akin
Jam Akin's picture

There is a fairly large disconnect between what one reads and what I actually see in China these days.  This is  one piece that appears to square better with the business reality I'm seeing in the China market now.  

Be interested to hear from others who are actually doing business in China.  We are selling capital equipment into local companies/JVs/MNCs that produce durable goods for domestic consumer demand, mainly auto industry.  Business has been very good for months now dating back to mid-2013.  

Thu, 04/17/2014 - 18:37 | 4671125 Hongcha
Hongcha's picture

It cannot slow down ... like a shark it must continue to move.  we have never been so interconnected.  Time to batten down and get ready for some weather.

Thu, 04/17/2014 - 19:23 | 4671261 Bindar Dundat
Bindar Dundat's picture

It's time to become un-interconnected.  Between canada and the U.S. America has everything we need to say fuck off to the rest of the world.   Pull up the draw bridges, engage the dome, and start producing our own products; it's the way to go.

Thu, 04/17/2014 - 18:14 | 4671063 AdvancingTime
AdvancingTime's picture

I agree growth is slowing but I'm far less optimistic about the ability of China to do much about it. Corruption has been a huge issue within China for years now more problems are brewing. China has entered a great credit trap and is awash in overcapacity and debt. Much of the recent growth in China after 2008 came from a massive 6.6 trillion dollar stimulus program that expanded credit and poured massive amounts of money into the system.

This money encouraged expansion and construction with little regard as to real demand or need.  After several years of growing debt concern is rising the whole unstable pyramid is about to come crashing down bringing China and possibly the global economy with it. This is not just about writing off a few bad loans. The shadow banking sector is so large that concerns exist about contagion and a domino series of defaults that might rack the economy as savers lose money. More on this subject in the article below.

http://brucewilds.blogspot.com/2014/03/china-and-great-credit-trap.html

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