More funny numbers from China
The stench emanating from China’s macroeconomic indicators is getting worse, yet the news from the country’s Ministry of Truth is just as sunny as ever. At some point the funny numbers will collide with reality, and China could be in for a meltdown.
…China’s imports from Japan fell 16.2pc in December. Imports from Taiwan fell 6.2pc.
The Shanghai Container Freight Index fell 1.4pc to a record low of 919.44 in November, after sliding relentlessly for several months. It has picked up slightly since.
The Baltic Dry Index measuring freight rates for ores, grains, and bulk goods, has fallen 44pc over the last year. Kasper Moller from Maersk in Beijing said weak Chinese demand for iron ore was the key culprit.
…[R]ail, road, river and air freight volume for the whole of China fell to 31780m tons in November (latest data), from 32340m tons in October. Not a big fall, but still negative. (National Bureau of Statistics of China.)
Chinese electricity use was flat in over the Autumn, with a sharp fall in the (year-on-year) growth rates from 8.9pc in September, to 8pc in October, and 7.7pc in December.
Residential investment has been contracting on a monthly basis, and of course property prices are now falling in all but two of China’s 70 largest cities.
So how did China pull off an economic growth rate of 8.9pc in the fourth quarter?
Something is rotten in the state of
Evans-Pritchard is correct when he calls the problem “deeply structural,” saying that the “whole economy is massively deformed and tilted toward excess investment.” And where excess investment leads to malinvestments a bubble is sure to follow. The next bubble may be one that China is incapable of papering over.
The usual caveat applies: I do not know when the other shoe will drop. But that it will is, to my mind, beyond question.