Friday, November 19, 2010

China's Sputtering Engine: September 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 has drawn to a close.

China’s leading economic indicator has now declined for nine consecutive months with the latest September period showing a notable month-to-month decline of 0.36% bringing the latest level 1.89% below the level seen in September 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 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.