What an amusing place China has become. New April data came in much weaker than expected with retail sales slumping to a record low of 7.2%, industrial production unwinding all of last month’s big lie at 5.34% and fixed asset investment at 6.1%:
The shift away from “investment-led growth” is now an ongoing joke as everything other than building is slowing fast. Fixed asset investment is powering in both public and private:
But it is in realty where the real action is. Sales by floor area year to date are still down -0.3 but recovering:
Though land area sales are still cratered at -34% year to date. These suggest slowing building ahead.
Not so, say starts! Floor area starts for April hit a record high, up 50% year on year, and year to date is powering along at 13.1%:
China now has the largest floor area under construction in its history by far:
This building Kraken is so vast that steel production has also entered comical levels, blowing away all records for April at 85.03mt:
Even accounting for the shift of 60mt from illegal to official figures in 2017, that is a fuck off amount of steel.
By comparison, cement is lower but not bad, probably indicating more housing than infrastructure under construction, though once you adjust the steel number for the 2017 reforms it’s not such a large disparity:
The AFR likes to pretend that China is winning the trade war. It is oh so wrong. Everybody knows that China must stop wasting capital on apartments to nowhere. But as its export machine grinds to a halt, and consumers are rocked by the trade war, all it can do is keep throwing ever more wasted yuan on the construction pyre.
If you replace wasteful weapons with wasteful apartments, China is on the path of Soviet Union. Hollowing out its own development with an unproductive debt burden it won’t be able to service, stalling income growth.
China isn’t going to collapse like the USSR did but it sure isn’t going to take over the world, either, as it disappears into the gaping maw of the middle income trap.
