Classic Chinese building recovery underway

Given it is likely mostly lies, the most remarkable feature of the Chinese recovery is that it still looks like crap. Headline growth indicators are weak with industrial production up a lousy 4.4% year on year and still down -2.8% YTD. It’s even worse elsewhere with retail sales down -2.8% YOY and -13.5YTD. Fixed asset investment is still down -6.3YTD:

Digging into things a little, it’s still ugly. Empty apartment sales are down solidly YTD but turning upwards YOY:

Starts are likewise headed up:

That leaves floor space under construction up a lousy 2.3% and falling:

Fixed asset investment is all SOE and infrastructure-related:

That leaves industry very mixed but with building-related stuff out of control. Steel production hit an insane 92.2mt:

With the scrap component still crushed:

Meaning blast furnaces are going like the clappers.

Cement is equally bananas:

Power generation was at 4.3% YoY and -3.1% YTD.

Finally, retail has continued its structural slump with eating out a thing of the past:

This is your classic Chinese stimulus recovery. All building to no purpose with truly mind-boggling levels of raw material inputs to drive it and never-ending wasteful debt making imbalances worse.

Great for iron ore and not much else.

David Llewellyn-Smith

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