Chinese growth spirals into trade war vortex

China’s July data dump is out and there is no hiding the pain now. Industrial production hit the lowest level in living memory at 4.8%, retail sales retraced sharply to 7.6% and fixed asset investment slowed to 5.8%:

Under the bonnet, real estate sales continue to fall:

With developer land purchases signalling much worse ahead for starts at -29.4%:

However, as we’ve seen all year, starts keep coming anyway, still running all time records for August:

With total floor space under construction accelerating slightly to 9%:

But, steel output did slow to 85.7mt:

With cement still painting a gloomier picture for infrastructure:

Steel scrap is also pushing towards record scrap input:

There is nothing very good here for bulk commodity demand. China’s industrial economy is stalling. The offset of growth in empty apartments is slowing with leading indicators pointing much lower. Retail sales are grinding lower and are probably worse than reported.

China is headed for worse not better even as it pumps in ever more credit.

David Llewellyn-Smith

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