China data tanks

Well, now we know why iron ore has been falling. Chinese February data is awful with industrial production, fixed-asset investment and retail all missing big.

IP came in at 8.6% versus 9.5% expected:

IP

Fixed asset-investment came in at 17.9% versus 19.4% expected:

china

Retail sales came in at 11.8% versus 13.5% expected:

retail

In short, China has slowed fast (even with the usual caveats of seasonal adjustments around Lunar New Year). So fast, in fact, that markets might react positively to this data on the expectation of stimulus.

The greatest concern is retail. It raises the specter of the Chinese being unable slow their industrial economy without slowing households as well. If that’s true the only path to rebalancing is a hard landing, willingly or not.

19 Responses to “ “China data tanks”

  1. Hunson Abadeer says:

    Seems like we are going to find out how much pain they are willing to endure sooner rather than later.

  2. Dave_Comments says:

    Looks like AUD is expecting stimulus… just look at that thing… we’ve even out-sourced the value of our currency.

  3. migtronix says:

    Interesting developments:

    China’s spot HRC prices recover lost ground as raw materials prices climb

    China’s domestic hot rolled coil market gained some upward momentum on Thursday March 13, as the raw materials sector saw signs of recovery.

    China produced a total of 130.8 million tonnes of crude steel during the first two months of 2014, up by 1.7% year-on-year

    Can’t post links as its behind Steel First firewall.

  4. [email protected] says:

    What adjustments to expectations were made for the holiday period? Any?
    Has there been any ducks n drakes played over the recent yuan devaluation? ie delayed invoicing for exports? hhmmmm so many questions but so many beers …
    I’ll peruse next month for a better clue.

  5. briefly says:

    There is no doubt at all that Xi Jinping is serious about cracking down on the racketeering that has been the heart and soul of State-directed fixed capital investment. The confiscation of land for construction of housing, infrastructure and heavy industry has enriched many an official, but this mode of private inducement and public economic expansion has been officially suspended, at least for the time being.

    The key instruments of the economy – banks, heavy industry (with steel and cement at the core), chemicals, transport infrastructure and equipment, heavy engineering – are going to have to find a way to make a relatively honest living.

    This is a radical departure from previous practice so it’s no wonder the grow-at-all-costs system is in trouble.

    Can they stimulate? Not without backing away from the very deeply targeted anti-corruption measures instigated in March 2013. Considering corruption is such an enormous problem in the daily life of Chinese people, and such a lot has been staked on exposing and identifying corrupt officials as well as those who have opposed Xi, there is not much choice for the CCP. Economic reform and rooting out corruption go hand in hand.

    We will soon see whether Xi – who has already taken formidable hold on power in China – has the capacity to impose reform in all echelons of the economy, party and military.

    • 3d1k says:

      At the edges I expect some sampler noise, but not where it really counts.

      There will be casualties, will they be among the major players? No. I think not.

      • flyingfox says:

        There will be casualties, will they be among the major players?

        Whether or not , I don’t know. I suspect not. However the “party” seems to be over…

  6. poida says:

    Each of those graphs is on a downward trend for the 6 years of data shown.

    • And yet still expanding at a rate that most western economies dream of :)

      • mikeinnz says:

        The worry is that the retail figures have dived in unison with capex. Japan had the same problem when things turned to custard. The more the wider economy is perceived to be in decline, the more households shut up shop.

  7. The Lorax says:

    Meanwhile AUD is completely unaffected and Dad’s Army reported the same story as China industrial output lifts.

    Its all good!

  8. migtronix says:

    Dalian Commodity Exchange (DCE) could face the first delivery of its iron ore contract at the end of the week, when the front month March contract reaches its final trading day

    That could be fun.