Double Fata Morgana, Commentary on the Chinese Economy by Norbert Hellmann
Frankfurt (ots) – It’s been hot in China for many weeks. In shimmering heat, distorted perceptions can sometimes arise. Pleasant wishful thinking seems within reach, only to vanish into thin air again. Since the beginning of June, China’s well-oiled propaganda machine, along with an army of economic researchers in government service, has not missed an opportunity to celebrate the economic upswing in the world’s second largest economy, which became tangible with the lifting of the lockdown in Shanghai.
June did indeed bring an improvement in sentiment in industry and services, albeit inevitably because things couldn’t get any worse compared to the lockdown months. The only question is whether such “evidence” can be unabashedly continued for future forecasts. The new purchasing manager data for July speak against it. In the industrial sector, the mood barometer – depending on the survey – has already fallen below or close to the expansion threshold. In plain language, this means that the level of activity in the industrial powerhouse China is no longer taking off, but is starting to stutter again. All important indicators for incoming orders, export orders or the employment situation are pointing downwards again.