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China’s Three Measures Of Real Growth All Weaken

Business, China
By John Richardson on 16-Jun-2015


By John Richardson

YOU have to again conclude from the above chart that the China so many thought they understood remains very, very different.

The chart shows electricity consumption. Along with credit creation and rail-freight movements these are the three measures of real GDP growth that have been identified by China’s Prime Minister, Li Keqiang. Everything else is misleading.

We already knew a few weeks ago that between January and April of this year, total social financing, the measure of the generation of all new credit in China’s economy, was down by 18% on a year-on-year basis.

And last it week it also emerged that in the first quarter of 2015 rail-freight transport volumes fell by 9% over the same period in 2014.

Now we have this chart, which shows that electricity consumption rose by only 1.6% in May. And if you look at the pattern of growth in electricity consumption since 2009, we are now back to where we were early in that year, before China’s giant economic stimulus package kicked in.

Sure, the slowdown is uneven with some provinces and industrial sectors doing better than other provinces and industrial sectors.

But are you backing the winning or the losing provinces and companies in this radical economic transformation?