CHINA’S ZERO-GROWTH ECONOMY

Forbes magazine recently reported on China’s shrinking economy. Excerpts below:

The National Bureau of Statistics announced that China’s production of electricity surged 20.6% in February. This follows a fall in output in January reported to have been between 5.1% and 7.5% (NBS, inexplicably, has not released a kilowatt figure for the first month of the year).

The statistics bureau reported that electricity production for the two-month period increased 7.1% over the same period last year. NBS combined the two months to eliminate the statistical distortions caused by the Lunar New Year holiday, which fell in January this year and February last year.

Because electricity output, the best indicator of economic activity in China, invariably outpaces the growth of gross domestic product, it’s apparent the Chinese economy is expanding only in the low single digits.

China’s second best indicator is cargo shipments. The Shanghai port, the world’s busiest, reports that container throughput was up 3.6% and other cargo up 7.0% for the first two months of the year. China Eastern Airlines, the Shanghai-based carrier that is China’s second-largest, sees lower cargo demand at the moment.

Total vehicle sales are in the tank. They fell 6.5% for the first two months of the year. Bellwether passenger cars were down 4.9%, and commercial vehicles were off 12.3%.

New lending for the January-February period was down 8.2%.

Trade figures also point to a decline. Headlines in the last couple days focused on the February deficit, the worst since 1989, due largely to faltering demand from Europe, but the real news is that domestic demand is not driving imports. Imports were up only 7.7% for the two-month period, and that was only because of continued stockpiling of commodities. Purchases of foreign oil exceeded records, and copper imports were high as well.

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One Response to “CHINA’S ZERO-GROWTH ECONOMY”

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