Tuesday, August 31, 2010

China's Sputtering Engine: June 2010

Looking at the latest release of the OECD economic indicators for China, it appears that the massive jump in economic activity seen since the panicky period of late 2008 is drawing to a close.

China’s leading economic indicator has now declined for seven consecutive months with the latest June period showing a notable month-to-month slump of 0.18% leaving the latest level just 0.59% above the level seen in June 2009.

Looking at past recessionary periods, it’s important to note that while China’s economy is clearly slowing, it will take some time to determine the severity.

We may be seeing the beginnings of an abrupt pullback of equal and opposite force to that of the government sponsored propping applied during 2009 or simply a slowing of a more durable overall recovery as was seen during the periods following the 1990s and early 2000s recessionary periods.