Have I mentioned there appears to be something profoundly wrong with China's economy?
First up, from CNBC via MSN, October 13:
China consumer prices were unexpectedly flat, as economic recovery remains fragile
- Consumer price index for September was flat on an annual basis in September, the National Bureau of Statistics reported Friday.
- Producer price index fell 2.5% from a year earlier, weaker than expectations for a 2.4% decline, after a 3% drop in August.
- Tepid prices underscore what China's top leaders labeled as a "tortuous" economic recovery after the country emerged from its draconian "zero Covid" curbs toward the end of last year....
*****
....Weaker food prices
Weaker food prices were a big drag on September's consumer prices, though China's National Bureau of Statistics said this was due to high food prices last year.
On Friday, official data showed China food prices collectively fell 3.2% in September from a year earlier.
In particular, the price of pork — a key staple meat in Chinese diets — tumbled 22% last month from a year ago. That's as the price of livestock and meat collectively dropped 12.8% and the price of fresh vegetables fell 6.4%.
Services inflation was at a 19-month high of 1.3%, Capital Economics said.
"This suggests that China's low inflation rate is not primarily due to domestic weakness," the firm's Zichun Huang said in a note. "Instead, it appears to be related to excess capacity in industry as the pandemic boom in global goods demand has reversed.
Core goods inflation remained subdued at 0.3% year-on-year, Huang noted.
Month-on-month, consumer prices edged up 0.2% in September, with food prices increasing 0.3% — representing a decrease of 0.2 percentage points from August's print compared to the previous month.
"The market supply is relatively sufficient before the Mid-Autumn Festival and National Day this year, and the food price increase is slightly lower than the historical average for the same period," said Dong Lijuan, chief statistician of the Urban Department of the National Bureau of Statistics, in a statement.
China's Mid-Autumn Festival and National Day were in early October this year.
....MUCH MORE
As noted back in June:
What's that Got To Do With The Price Of Pork In China?
Pork prices are one of the most basic indicators of the health of the Chinese economy.
Our proxies are hog futures on the Dalian Commodities Exchange. For folks paying attention, the months-long sideways move, here using the September futures as the example, the sideways move from mid-January to mid-April put the lie to the hubbub about the Great Reopening. The move up from December 2022 was all anticipatory emotion rather than actual demand:
And from Trading Economics (also on blogroll at right):
China's trade surplus in September 2023 narrowed to USD 77.71 billion from USD 82.67 billion in the same period the previous year, but it exceeded market forecasts of USD 70 billion, as both exports and imports declined at the same rate, reflecting persistent weak demand both domestically and internationally. Exports fell by 6.2% year-on-year, marking the fifth consecutive month of decline, which was better than the market consensus of a 7.6% drop. Meanwhile, imports declined by 6.2%, which was broadly in line with the expected 6% drop and marked the seventh consecutive month of decrease. The trade surplus with the United States widened to $33.2 billion in September from $33.1 billion in August. source: General Administration of CustomsAgain, no psychic credentials required to see what was coming:
"Chinese factories are shutting down two weeks earlier than usual ahead of Chinese New Year"
It really is starting to appear that China could see a recession* caused by slowdowns in their Western customers' economies.It's only recently that we've started thinking the previously unthinkable...
The underlying fact set was the point of the intro to and outro from January 31's "What If China Had A Reopening And Nobody Cared?":
Here's the outro from a May 8 post:China isn't reopening, it has reopened. This is it. And despite the record savings the population has accumulated over the last three years we are not seeing a wave of demand in the domestic economy. Using one of the most basic proxies for what is actually going on, the price of pork, the grand reopening, is, to say the least, muted. This is especially true considering the country just celebrated the largest, most festive holiday on the calendar.*****One data point does not make a trend but it does raise the possibility that the facile expectation of a boom in Chinese consumption is wrong.What if, and I'm just spitballing here, what if the giant ball of savings is being targeted by the rapidly aging population as a retirement cushion, i.e. future consumption, not current?
That would leave China's export economy to carry the weight.
And that is not looking very promising at the moment:....
...If you saw the Chinese export numbers an hour ago you know there is no Chinese cavalry riding to the rescue of the Western economies. Chinese imports were flat. No uptick in demand for anything the west produces. Exports increased 8.5%, showing just how dependent China remains on the West staying out of recession....
