Robust credit issuance – which rose by almost 60 percent in the first quarter from a year earlier – is no longer able to generate the same level of growth as it did compared to a decade ago, said analysts.While the manufacturing index has returned to positive territory: China Manufacturing Index Hits 11 Month High
Back in the mid-2000s, one yuan of credit generated around one yuan of nominal GDP. In 2012, three yuan of credit generated around 1 yuan of nominal GDP, according to financial analysis firm IHS.
The purchasing managers index, a measure of economic expansion and contraction, reached 50.9 in March, slightly above the equilibrium mark of 50. It was 50.4 in January and 50.1 in February and has now remained above 50 for six consecutive months.The CNBC article goes on to say:
Of the data released on Monday, economists say the most telling indicator of weakness in the economy is the deceleration in industrial production in March to 8.9 percent from an expected increase of over 10 percent. In August 2012 when hard landing fears were running high industrial production also grew at the same pace.
"We have lost confidence in a robust recovery," added Alistair Thornton, senior China economist at IHSThis IS the recovery. China's economy is a giant snake still digesting the bulk of the post crisis bailouts. Now we are just waiting around to see how skinny the snake really is without being force fed.
"While August 2012 proved the bottom for last year's downturn, we doubt March will be the turning-point for 2013, given macro policy has shifted to a tighter stance with renewed controls on the housing market, local government financing vehicles and wealth management products," Thornton said.Okay, this is an unexpectedly short economic cycle (based on the calendar year?) being analyzed here. I don't know where to go with that.
Hat tip: Painted Turtle commenting at vancouvercondo.info