Chinese activity is solid

There a lot of bearish material around the web today on disappointing Chinese growth. And it’s true that compared with past years, April’s figures are unspectacular. But it is also the case that activity is solid, more solid than sentiment suggests. Find two reports below, one from ANZ and the other from Phat Dragon on where growth is at. My take is that we are slogging on around 8% and if anything seeing a broadening of activity.

Industry is recovering solidly:


Retail sales growth looks a little concentrated in jewellery but is still broad based:


Total lending growth was down in April but is still running at a ridiculous pace. From CLSA:

social financing volume

The concerns about the deteriorating quality of Chinese growth, with much more credit needed to support much lower GDP, are real. But the above figures to set us for a couple of good quarters of activity.

I still see Q4 as the denouement for the cycle as real estate curbs kick-in and construction activity begins to fall away.

ANZ Quick Reactions – China April Activity Data

Er 20130513 Bull Phat Dragon

David Llewellyn-Smith
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  1. Most of the individual components of industrial production are well down on March levels suggesting the year-on-year figures may be flattered by comparison with a low base. Cement is an exception, but that is in serious oversupply.

  2. Electricity production is on 6% increase pace, which is much better than 2% growth but indicates sub 8% GDP growth.. However, fixed asset investment is on 20.6% pace which is down from last month.

    It’s possible China is in final ponzi phase. New financing is required to cover old financing.

    Watch for major policy shift in q3 as third plenum meeting is held. New blueprint to be announced to supposedly transition to efficiency and privatisation.