China’s Government Reports GDP within the New Norm

Quarterly GDP - Q217


China’s official second quarter GDP stayed the same as the first quarter coming in a millisquigen above expectations.  Analysts note that “industrial output and retail sales picked up while fixed-asset investment remained strong.”  One must always take government calculated GDP numbers with a grain of salt, but the relative trend is probably accurate.  The economy slide that was predicted in early 2016 has not materialized as many other indicators confirm.  Sources: Trading Economics; National Bureau of Statistics, China

Mini-Crash in China’s Service Sector

Non-Manufacturing PMI - Sep-17


A four percent drop in the service sector index is the largest monthly decline we have seen in two years. Next month will be significant. If it ticks further down there is reason for concern since September’s 50.6 is close to magic number (50) that flips into negative territory. If it turns back up, we can look at last month as an anomaly. This number is below both economists’ expectations of 53.1 and the 13-month average of 52.3.  Source: Markit Economics

Business Confidence Spikes

Business Confidence - 9-17


The sharp 1.4% increase in business confidence from August to September was driven by increases in new orders, domestic and export, and increases in overall buying activity along with the continuation of a sixth-month string of decreases in employment. Growth is always accompanied by higher productivity as indicated in these numbers.  Expect stories about how automation is replacing workers in the Chinese economy.  What may be beginning in China’s economy is what has happened in the US economy over the last couple decades – productivity gains via automation have cost jobs.   Sources: Trading Economics; National Bureau of Statistics, China

Onward and Upward

China Consumer Confidence Aug-17


The third consecutive month of gains in consumer confidence takes the number to its highest point since we have been watching, beating last month which was the former high point.  Chinese consumer confidence is the robust under-pinning of the modern Chinese economy, just as the government has wanted.  Inflationary tendencies we have seen in other indicators have yet to reach the consumer psyche.  Sources: Trading Economics, National Bureau of Statistics, China

The Most Boring Graph in History

china monthly retail sales

In our ongoing battle to grab attention, we insist on publishing the results of the most boring graph in the history of the world, China’s monthly retail sales growth. Every month since June of 2014 it has increased in its slow, but consistent climb upward.  We publish this graph because it is a testament to the valued Chinese consumer and because we believe that some day it will decline and we want to be here when it does.

Source: Trading Economics, National Bureau of Statistics, China

Smartphone Subscriber Growth in China Remains Consistent at a Slower Rate

china mobile carriers

With an addition of almost nine million new 3G/4G subscribers in August, replacement growth in China continues, but at a slower rate then we have seen since the beginning of 2017.  Through the first eight months of 2017, growth has averaged 5.98 million new smartphone subscribers per month verses an average of 21.65 million per month in 2016. Perspective: 1.1 billion smartphone subscribers in China is easily twice that of European and the US combined – a ginormous advertising market.  Sources: China Mobile, China Unicom, China

Consumer Prices Reflect Higher Costs at Manufacturing

china consumer price index

Last week we noted a hint of inflation in both manufacturing and non-manufacturing sectors of the Chinese economy. The higher costs are translating to the consumer side as the Consumer Price Index continues its six-month rise back toward last year’s high. Still the level remains slightly below its level from September 2016.  Sources: Trading Economics; National Bureau of Statistics, China

China’s Service Sector Softens

china caixin

Though overall business confidence has remained strong; there was a notable softening in the service sector in both July (-0.7%) and August (2.0%).  The chief cause for the decline was slower overall domestic and export orders.  Here, as well as in the manufacturing sector, employment declined for consecutive months. An inflation indicator can be seen in the second monthly increase in selling prices.

Sources: Trading Economics, National Bureau of Statistics, China

Manufacturing in China Further Improves

china caixin




August 2017 saw the manufacturer’s PMI climb well above both expectations and its 13-month average of 50.8.   Positive drivers included a 3-year high in new orders overall and a 7-year high in new export orders, which contributed to expanded production schedules and increased buying.  All of which was accomplished with fewer workers – a growing trend in China.  The only counter weights to growth are increased environmental regulations and a hint of inflation in the future.

Source: Markit Economics

August: Another Strong Month for Business Confidence in China

china business confidence




Growth in business confidence for August was driven by increases in output, new orders – both domestic and export – and by buying quantity.  At the same August was the fifth straight month in which employment fell.  Lower overhead and increased output means higher profits.  It also implies that automation is affecting the production line in China.


Sources: Trading Economics; National Bureau of Statistics, China