Posted on 11/02/2021 7:24:14 PM PDT by SeekAndFind
China’s Manufacturing Purchasing Manager Index (PMI) fell 0.4 percentage points in October to 49.2—any number below 50 represents a contraction in manufacturing production—according to official figures from the National Bureau of Statistics. The data was worse than expected with market analysts expecting a figure of 49.7. This is the second consecutive month the index has indicated a contraction, and is the lowest the index has been since the onset of the pandemic.
Article by Edward Cheng from our premium news partners at The Epoch Times.
Perhaps more worryingly, the data shows signs of stagflation—slow economic growth coupled with accelerating inflation. Driven by increases in commodity prices, the sub-index for output prices rose to 61.1, its highest level since 2016. But at the same time, a lack of demand is driving the contraction in production. The combination of high inflation and weak consumer demand could create a vicious negative feedback loop.
“About one-third of the surveyed companies listed insufficient demand as their biggest difficulty, indicating inadequate demand had restricted their production,” said Zhang Liqun, an analyst at the China Logistics Information Center, told Reuters.
But this is only the most recent data point in a series of negative economic news coming out of China. The world’s second-largest economy is unambiguously stuttering, leaving the authorities stuck in a bind as they attempt to navigate long-term goals with short-term needs.
The manufacturing numbers only serve to reinforce the disappointing gross domestic product numbers published last month. The National Bureau of Statistics reported that the country’s economy grew by only 4.9 percent in the third quarter, slowing from 7.9 percent in the second quarter.
Power outages have been a core headwind to Chinese economic activity. The energy crunch has been driven by a variety of factors that have colluded to cripple the country’s power sector.
Demand for energy has been unusually high, driven by unseasonably cold temperatures and high demand for Chinese goods from other countries as they have exited the pandemic.
But as energy demand has increased, supply had been restrained by the authorities. China removed a valuable source of imported coal when it cut coal purchases from Australia at the end of 2020, a move critics say was aimed at punishing the country for calling for an investigation into the pandemic origins. Meanwhile, the Chinese Communist Party’s carbon-neutral targets have led to lower domestic coal production. Moreover, government regulation capping electricity prices has meant power plants have not responded to these forces. These forces have resulted in a self-inflicted surge in energy prices and energy rationing across the country, stunting economic activity.
To compound the issue, even with the slowing production the global shipping crisis has meant Chinese manufacturers have not been able to capitalize on high global demand for their products.
“It is clear that economic momentum is slowing quickly and supply chain pressures are compounding this weakness,” wrote Mitul Kotecha, chief emerging markets Asia and Europe strategist at TD Securities, in a Nov. 1 research note.
Though power shortages and supply chain issues are unlikely to be a long-running headwind on the economy, one cannot ignore how sensitive China’s economy has been to these developments.
Perhaps most worryingly is the property market, which has continued to slide and shows little sign of abating.
Low consumer demand, high leverage, and regulatory hurdles have seen a string of Chinese property developers, most notably Evergrande, run into liquidity and debt troubles. And these troubles likely run deeper than just a few firms. Bloomberg reports that two-thirds of China’s top developers have breached at least one of the “three red lines,” a series of regulatory interventions designed to deleverage the industry.
Consumers have understandably become cautious in the face of all these debt troubles. According to property research firm China Real Estate Information Corp., new-home sales for the top 100 developers fell by 32 percent year-on-year in October. As new-home sales dry up, this will amplify any liquidity concerns faced by property developers.
With property accounting for around 25 percent of China’s economic activity and a substantial portion of assets held by households, the slide in the property market will undoubtedly weigh heavily on growth.
Adding to the economic headwinds, China has continued to enforce a stringent Covid-zero strategy. Outbreaks are still met with heavy-handed and disruptive lockdowns, with the retail sector being particularly sensitive to these measures. With the authorities showing no signs of changing their strategy, further disruptions to consumer spending and production will undoubtedly occur.
They brought COVID on the world and the world shut down and not importing their cr@p.
An economic mess is cause for unrest. Xi may view a foreign adventure as a convenient means to distract attention from the mess. Let’s see, where could he have some fun???
Good find.
I expect that China will not have a soft economic landing ... but the story will be hidden by smoke and mirrors as has been for years.
No wonder Xi stayed home this week. He would have never gone back.
No wonder Xi stayed home this week. He would have never gone back.
Add inability to unload thier ships full of their sh!t to the mix.
The CoupFlu misfired like one of Little Rocket Man’s missiles.
It was supposed to have given the ChiComs a brief advantage of full production while the world shut down “thanks” to their fearporn; but they miscalculated the overreaction of most of the world.
“Xi may view a foreign adventure as a convenient means to distract attention from the mess.”
I’ve been telling people for years, they are becoming more like Americans. So, yes.
Could be a story about the USA four years from now.
Those are secondary problems. China’s biggest problem is finding enough food. And after that, energy, they can’t even keep the lights on.
one-forth of China’s economy is
building vacant condoes
that is a basic problem
p
It is hard to find new products “made in America”, but there are plenty out there second-hand; things we made forty years ago are still more durable than cheap ChiCom crap.
The Chinese brought on covid, and then knowingly spread it throughout the world in order to have economic dominance.
China depends on coal for much of its domestic manufacturing power, yet they shut-off their largest supplier (Australia) due to "saving face", and a political squabble.
They 'shot themselves in the foot' to make a political statement, and now China suffers the unintended consequences.
Too bad, so sad...
that is a basic problem
Let's make a deal.
We can give them enough Central Americans, Somalis and Afghans to fill allah those condos!
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