China released its October data dump on the weekend and the results were unremarkable.
Industrial Production powered on at 10.3%:
For all of the talk that a lower growth China with a bigger economy being the same as the higher growth China of yesteryear, the next charts say different. Inflation came in at 3.2% for consumers and -1.5% for producers:
The CPI continues its gentle uptrend but the PPI rolled over for the first time in six months. The persistence of deflation for producers shows just how much spare capacity China is carrying at these lower growth levels. It’s too early to make much of the PPI rollover it is good leading indicator of industrial activity so worth watching.
Fixed asset investment was unwaveringly high at 20.1%:
And retail sales were steady enough at 13.3%:
The clear relationship between these last two charts shows just how difficult any rebalancing in China will be.
We are only waiting on the all important new yuan lending data now but the early indicators suggest it will be soft, possibly very, from China Daily:
New loans by China’s Big Four banks hit a new low in October, underlining progress in Beijing’sefforts to de-leverage the economy.
The Big Four, China Construction Bank, Industrial and Commercial Bank of China, AgriculturalBank of China and Bank of China, issued just 182 billion yuan ($29.87 billion) in loans inOctober, around 40 billion yuan fewer than last October, the smallest amount for the year.Analysts estimate that new lending by the sector in the month stands at around 500 billion to600 billion yuan.
Chang Jian, a Hong Kongbased economist with Barclays Capital, estimates that new loansdropped to 525 billion yuan in October from 787 billion yuan in September. That translates intoa 0.2 percentage point deceleration in M2 growth from 14.2 percent in September to 14percent in October.
