While you were sleeping

Quick one here about Chinese GDP released overnight. Official figures from the Chinese government state that GDP is tracking 7.4% YOY vs an expected 7.6%. This is the lowest figure in some time and reflects a cooling off certainly not a complete breakdown. The numbers are shone in a slightly better light when you look at their industrial production figures which came in at 9.2% vs an expected 8.9% and retail sales were higher as well.

China a big exporting nation are being affected by the malaise in Europe and probably yet to reap any benefits from the signs of a pick up in the US. Their fixed asset investment has stayed constant but still well off the highs and looks to be trending lower. At least one well known Irish economist will argue that China’s problem is actually over-investment so perhaps these figures trending down is necessary for a period.

I would not be too shocked by any of these numbers you would have to be on a remote island not to know that China is experiencing a slowdown but the underlying causes of this slowdown serve to highlight the interconnectedness of the global  economy and how it is a lot more difficult to contain a slowdown in one country or trade bloc without affecting another. Division of labour and the law of comparative advantage has fostered global trade on a large scale but its now become so big that the domino effect is plain to see.

Also worth noting that there are plenty of conspiracy theorists out there claiming that the Chinese govt, release what data they want rather than what is actually the case. I can not confirm or deny any of these so I have to take the data at face value. Sometimes things smell funny and sometimes they dont, I guess its down to judgement at the end of the day and remembering these are just numbers and data at the end of the day, they can be right and wrong its how you use them that counts.

http://online.wsj.com/article/SB10000872396390444868204578063363516399122.html

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