Discussion is raging about the exact status of China’s economy – which, for now, appears heavily reliant on government capital investment. The export sector took a heavy hit in the second half of 2008, and sluggish demand in the US and Europe has continued to depress the prices of many exports. So, what is the current state of manufacturing, and is the much-touted swing toward producing for the local Chinese economy and away from a reliance on exports actually happening?
The main problem in answering such questions is China’s preference for year-on-year economic statistics. Given the global turmoil of the past eight months, setting current figures against those from one year ago is no longer a like-for-like comparison. Month-on-month statistics are a much more accurate barometer.
In truth, the signs are mixed. On the positive side, retail sales in China held up strongly in the first quarter, industrial output of building materials rose 14.4 per cent between January-April, while industry factory prices rose 0.28 per cent in April compared to March, the first monthly rise since October. On the other hand, industrial production slowed by one per cent in April compared to March, and concerns remain of deflation as Chinese buyers hold back on certain purchases in the expectation of further price falls.
This article, written by a Shanghai-based consultant (http://www.bizchina-update.com/content/view/2239/44/), explores signs that China’s macroeconomy has started to climb an upward curve – note, particularly, the monthly export/import figures between April 2008-April 2009
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