BEIJING (Reuters) – The last time China’s vast manufacturing sector had conditions like those in August it was March 2009 and the economy was about to rebound from the global financial crisis.
This time around analysts are not so certain a clear recovery for the major global growth engine will come anytime soon.
In fact, two purchasing managers’ indexes showed new orders are falling, adding to other evidence that suggests a slide in economic growth for the world’s second-biggest economy is deepening, pushing back expectations for when a rebound may occur.
“It’s quite clear we have a pretty rotten industrial cycle coming on. I don’t see it getting a whole lot worse… but I don’t expect them to get back for a long, long time,” said Arthur Kroeber, managing director of GK Dragonomics in Beijing.
Posted by byu2012 on September 4, 2012
The news out of the Middle Kingdom overnight wasn’t very reassuring: HSBC’s August PMI for China hit a nine-month low, another sign that the economy in China is slowing down. This is on top of the last GDP reading, which came in at a weak-for-China 7.6%.
But by how much is China slowing down? That’s the real question, and there isn’t a very good answer.
“Even with the decline, there is speculation that these figures may still understate economic slowing,” a new paper from the Dallas Fed notes, referencing the official GDP numbers, but making the point that China’s data are notoriously unreliable. “Economists have long doubted the credibility of Chinese output data.
“The dubious character of the official figures is no secret in China,” the paper notes, referencing a particularly infamous wikileaks disclosure, in which a senior Chinese official, Vice Premier Li Keqiang, told a U.S. diplomat that “official” GDP figures are “for reference only.”
The Fed paper, trying to get a better look inside China, compares electricity consumption — one of the indicators Li mentioned he himself looks at for an accurate take on the economy — to official industrial production numbers. He draws the conclusion that if the official numbers were right, electricity usage would have been far higher than it actually was.
Posted by byu2012 on August 23, 2012
BEIJING (Reuters) — China’s trade outlook for 2012 is worsening, weighed down especially by growing problems in Europe, the Commerce Ministry said on Thursday as it disclosed the longest run of falling growth in inward investment in the economy since the 2008-9 financial crisis.
The ministry singled out problems in the European Union — China’s biggest overseas market — as the core difficulty for exporters. It published data showing foreign direct investment from Europe fell 2.7 percent year on year, to $4 billion, in the first seven months of 2012.
“Right now, the sharp drop of exports to E.U. countries is the biggest important factor weighing on China’s export growth,” a ministry spokesman, Shen Danyang, said at a news conference.
“With the European debt crisis spreading and the global economy recovering at a slower than expected pace, we expect China’s trade situation in the second half will become more severe and we are facing more pressure to meet the annual target for trade growth,” Mr. Shen added.
Posted by byu2012 on August 19, 2012
One reads complaints about China trade and the WTO system every day in the U.S. These statements usually concern rule violations by China, limitations of the WTO, and the inability of the U.S. to enforce WTO law.
Howard Schneider, who covers international economics for the Washington Post, went even further in an article yesterday, saying that even though the U.S. has won a lot of cases recently, the WTO system still doesn’t work. The article’s title, “At WTO, a growing U.S. record of wins against China, but a less than certain benefit,” sums up Schneider’s thesis. The U.S. has been chalking up quite a few wins against China these days at the WTO, but the gains are difficult to ascertain.
Before we get to specifics, my response is to question those expectations. Who said that WTO wins would directly translate to specific gains for U.S. companies? That may be true, but not necessarily. If that is what industry and government believe the system promises, then I’m not surprised at all the recent grousing.
Posted by byu2012 on August 19, 2012
House Minority Leader Nancy Pelosi
Democrats and Republicans don’t agree on much in this polarizing election year, but one exception is trade with China. Nearly every politician seems eager to claim on the stump that the scheming Asian giant is hurting U.S. living standards.
So it’s worth noting a new analysis by the U.S.-China Business Council that shows how America’s individual Congressional districts gain from trans-Pacific trade. The results show a striking dissonance between the anti-China rhetoric and business on Main Street.
Republicans such as Frank Wolf of Virginia, John Shimkus of Illinois and Joseph Pitts of Pennsylvania have all signed onto the latest legislative effort to punish Beijing for its alleged currency manipulation. But their districts’ goods exports to China have increased by 536%, 686% and 640%, respectively, over the past decade—much faster than exports to the rest of the world.
On the Democratic side, Jim McDermott of Washington, Nancy Pelosi of California and Louise Slaughter of New York also have co-sponsored currency legislation despite their districts’ booming China exports. Voters can check their own districts’ reality on the Council website and compare it to stump-speech rhetoric.
Posted by byu2012 on August 18, 2012