China’s economy continues to slow

China lendMar12.pngLatest data confirms the growth slowdown now underway in China:

• Rmb bank lending (purple column) is down 8% year to date versus 2011
• The leading indicator (red line) for the economy fell further

Bank lending has been the main growth engine for the economy since 2009. But it led to major inflation problems, particularly on food prices, and a housing bubble. So the government has little choice. It has to slow things down, or risk more social unrest.

This slowdown is now being confirmed by the OECD’s leading indicator. It is well below the 100 level, which divides slowdown from expansion.

Western financial analysts continue to wait for another major stimulus programme. But as the blog has argued, their wait may be a long one. Last week’s purge of Bo Xilai shows that China’s leadership have more important issues on their mind at the moment.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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