Markets appeared to take kindly to the improved report in yesterday's Chinese Manufacturing PMI result
Markets appeared to take kindly to the improved report in yesterday's Chinese Manufacturing PMI result. However, taking a step back and looking at longer term trends gives rise for further caution when it comes to the outlook for China. Charts in the attached article show 1) A steady decline in quarterly GDP since a peak in '10 2) The dramatic fall in Chinese home prices since the start of last year 3) A marked decline in fixed asset investment 4) Surprisingly, a decline in retail sales. This goes against theories that China is transitioning to a consumption phase or at least highlights a transitional period 5) Electricity production and industrial output have both had recent peaks in 2010 and are now steadily trending lower. It is worth having a look at the trends in these charts to put yesterday's market response in context. (VIEW LINK)
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