Today’s data release was better than expected, but not good

CHINA FINANCIAL - Report 15 Nov 2021 by Michael Pettis

Special points to highlight in this issue:

* Today’s data release was better than most analysts expected, but mainly because expectations for the month were very low. Growth in China continues to slow.

* While consumption growth outpaced production growth in October, as it has for the past several months, it is still sharply lagging the growth in total production when seen over a two-year period. This means that while we are seeing a partial reversal of last year’s great relative contraction in consumption, we still have a long way to go before it is fully reversed. Next year consumption growth would have to outpace production growth by 4.7 percentage points just to return to 2019 levels of imbalance.

* Property prices declined by 0.25 percent in October (an annualized 3.0 percent). This is probably what most analysts will be watching most closely over the rest of this year and into next.

Now read on...

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