More Signs Chinese Economy Is Slowing


The Chinese economy showed more signs of slowing, caused either by a recession in most of the rest of the world or perhaps a drop in spending by its own middle class. That middle class could be reacting to the recession news and fear that the slowdown could spread to the People's Republic. At that point, as far as the Chinese are concerned, injury to gross domestic product could become a self-fulfilling policy.

According to a Wall Street Journal article on the Chinese economy:

Industrial output, China's main monthly growth measure, increased 9.3% year-on-year in April. That's slower than the pace of growth for much of last year. But it's an improvement on March's data and allays fears that the world's second-largest economy is heading into a tail spin.

There was no shortage of holes in the ground being dug. New residential property construction accelerated. Investment in railways gathered steam and spending on other public works remained strong. Cement production increased 8.7% year-on-year in April up from 6.9% in March.

But the days of investment leading super-charged growth look numbered. Productive investment should generate output in the year it is made and the years that follow. A recent study by the International Monetary Fund suggests that China's massive infrastructure investment has only a short-lived impact - suggesting wasteful allocation of capital.

Filed under: 24/7 Wall St. Wire, China, Economy

Originally published