Slowdown in China

Goldman Sachs Current Activity Indicator (CAI) dips into negative territory in August. Since the CAI is scaled to GDP annualized growth, this implies negative GDP growth in that month.

Source: Global: GS Economic Indicators Update, 13 Sep 2021.

China’s August reading is -0.7% annualized growth.

The CAI is the first principal component of a set of macro indicators, scaled to GDP growth. The macro indicators include (for China) IP, PMIs, electricity use, auto sales, retail sales, cement production, freight volume, imports, etc.).

Yu Yongding has an article at PS  (“China growth prospects…”) indicating that China will not match earlier expectations for 2021 growth.

42 thoughts on “Slowdown in China

  1. Macroduck

    Covid related?

    The recent credit contraction , while obviously relevant to the Evergrande problem (hey, Moses), would normally take a few quarters to really get a grip on the real economy. Which suggests a Covid slowdown followed by and compounded by a credit slowdown.

    1. Moses Herzog

      I think the Covid-19 is at least a large portion of it (60%+ ???). We know Beijing lies about many statistics. Yes, they have improved, but they still lie. Why would we believe that they would tell the truth about a statistic (citizen deaths) which is apt to make broad numbers of the public very angry?? The answer is, that it really stretches credulity to think the Covid-19 case count or death count is close to accurate. And nearly every day the number of cases “from foreigners” is nearly 100%. Who in their right mind believes that?? I will buy a number like say 33% “from foreigners”. But day-after-day-after-day telling the public 100% of the cases are “from foreigners”. When will they ever grow up?!?!?!? OK, Nanjing and other things were very bad. Horrific. Let’s mourn them forever. OK, check, got it. But it’s been 75 years, Look in the mirror in a HONEST way and grow up. Someone stole your Radio Flyer red wagon when you were 5 and your sister blew out your birthday cake candles when you were 7. OK….. we got it. That’s NOT why you didn’t get the job at the police academy when you turned 30. It’s not. Quit blaming “Laowai” for black soot on your white t-shirt after walking around Beijing. Just stop. Please. Prove you are adults just once. Just once…… please.

      So the numbers in the GS visuals above??? ZERO surprise.

      1. paddy kivlin

        bloomberg analyst last night was almost sanguine about how “dangerous” delta variant is entering larger cities in prc.

        1. MOses Herzog

          I don’t wish them bad, I just wish they can face reality as it currently stands in any particular moment. Something of a Herculean task for government officials and nationalists over there. I’m not following the thought train any farther than there.

    2. Macroduck

      Yu Yongding’s article suggests there soon will be further fiscal expansion. Less clear about monetary expansion. He’d have the inside scoop.

  2. James

    What I wonder about is now that these dingbat GOP governors – have written off the elderly and children – how will fining employers of front line workers – teachers and healthcare providers – from taking simple healthcare precautions impact their state economies? Also – can we all agree that the GOP is anti-business and anti worker? The only policy that the GOP promotes is more tax cuts for the ultra wealthy.

  3. ltr

    September 14, 2021

    Chinese mainland reports 92 new COVID-19 cases

    The Chinese mainland recorded 92 new confirmed COVID-19 cases on Monday, including 59 cases of local transmission of the virus in its southeastern Fujian Province, the latest data from the National Health Commission showed on Tuesday.

    In addition, 20 new asymptomatic cases were recorded, while 401 asymptomatic patients remain under medical observation.

    This brings the number of confirmed COVID-19 cases on the Chinese mainland to 95,340, with the death toll unchanged at 4,636.

    Chinese mainland new locally transmitted cases

    Chinese mainland new imported cases

    Chinese mainland new asymptomatic cases

  4. ltr

    September 14, 2021

    Over 2.15 bln doses of COVID-19 vaccines administered in China

    BEIJING — Over 2.15 billion doses of COVID-19 vaccines had been administered in China as of Monday, data from the National Health Commission showed Tuesday.

    [ Chinese coronavirus vaccine yearly production capacity is more than 5 billion doses. Along with over 2.152 billion doses of Chinese vaccines administered domestically, another billion doses have been distributed to 100 countries internationally. A number of countries are now producing Chinese vaccines from delivered raw materials. ]

  5. ltr

    March 5, 2021

    China targets GDP growth of over 6% in 2021 as economic recovery gathers steam
    By Yao Nian and Yang Jing

    China has set its GDP growth rate at over 6 percent for 2021 as its economic recovery gathers steam, and will devote full energy to promoting reform, innovation and high-quality development, Premier Li Keqiang said Friday while delivering the report on the government’s work at the fourth session of the 13th National People’s Congress.

    “In 2021, China will continue to face many development risks and challenges, but the economic fundamentals that will sustain long-term growth remain unchanged,” Li said, noting the country has confidence in its economic recovery.

    The government is forecasting the creation of over 11 million new urban jobs this year, with an unemployment rate under 5.5 percent. On inflation, it expects the Consumer Price Index to increase by around 3 percent as well as steady growth in personal income. A drop of around 3 percent in energy consumption per unit of GDP is projected, along with a further improvement in the environment.

    Why set the GDP growth target at over 6%? …

  6. David O’Rear

    “No one believes Chinese statistics!”

    [Constructs an alternative index wholly dependent on Chinese statistics, because it is illegal to collect your own]

    “Look, bad economy!”

    (For the record, Some data are easily — and usefully — manipulated, and others not so much. But, it’s all we got.)

    1. Moses Herzog

      Don’t you think death counts and virus transmission rates might be ONE SINGLE THING they could get their sh*t together on, and that that number might be more important than monthly car sales and how many cases they can blame on foreigners?? You can tell me donald trump and his cabinet and installed folks are just as bad, but that’s a relatively small group, whereas in Beijing it’s a pervasive attitude. It’s not a room full of Stephen Miller types, it’s nearly the whole Beijing apparatus.

      As far as economics, if you wanna make wagers on Chinese government numbers without outside adjustments, be my guest. You can ride the gravy train with a lifetime job applauding Beijing officials. I don’t have the wherewithal to switch over to “amoral mode” with a toggle switch on my chest.

      1. David O’Rear

        Mr Herzog,

        Back in the 1980s and 1990s, I dismantled whatever Chinese statistics were available, and in the process developed a very keen distrust of the stuff. Delete Shijiazhuang’s population and total household spending from Hebei’s data and see what rural per capita levels it suggests. Compare to official Hebei rural numbers; and, after you stop laughing, repeat as often as the data permit.

        Now, go back and read what I wrote.

    1. pgl

      And what were those not good ways? That they both have become more capitalist with this?

      “the wealthiest 1 percent of the Chinese own 31 percent of the nation’s wealth, up from 21 percent in 2000. In the U.S., that figure stands at 35 percent, also up by roughly that much since 2000.”

      Yes – wealth inequality has risen in not good ways. But excuse me – economists HAVE noticed. Maybe we can ask Menzie – has he not noticed the increase in wealth inequality in China and the US? Of course Menzie has not written a weekly NY Times piece on this so shame on him.

    2. macroduck

      Mian, Straub and Sufi were the talk of Jackson Hole. Two questions for Johnny:

      1) Do you know who goes to Jackson Hole around this time every year?

      2) Care to guess what the Mian, Stain and Sufi paper was about?

      Go ahead, google ’em. Nobody expects you to know the answers.

  7. JohnH

    Obviously, pgl dismissed Meyerson’s article without bothering to read it…so I guess It falls to me to point out the regrettable ways that China and the US economies are similar: 1) rapidly rising inequality and 2) wage suppression. Understand that pgl?

    As is par for the course, many economists’ attention is fixated on GDP, which is a proxy for the well-being of the affluent, since they derive most of the income. Inequality gets noticed every now and then, but with nowhere near the regularity of GDP.

    As for wage suppression, how often do you read about that? Heck, BLS’ announcement today that real average hourly earnings dropped 0.9% over the last year didn’t even merit a peep!

    The question is: why are so many economists so fixated on statistics that are so closely tied to the well-being of the affluent and largely disregard those reporting on the well being of the majority?

    1. Barkley Rosser


      I have published on Chinese income distribution, which indeed has become quite unequal, as its wealth distribution. Curioualy, the predessor of Xi Jinping, Hu Jintao, made some efforts to reduce inequality increasing the social safety net for people in rural and western parts of China, which are poorer than the urban and coastal areas. But Xi seems to have pulled back from some of Hu’s policies, emphasizing growth in the urban centers more.

      Russia has also become very unequal as well, with US, Russia, and China a curious triplet on that matter.

      1. JohnH

        Good for you, Barkley. I’m glad someone is following at least one of the issues Meyerson raised. And I have to acknowledge that Krugman noted that “ according to the Fed’s Beige Book — an informal survey that is often useful for getting a read on business psychology —[employers are] reluctant to raise overall wages.”

        However that doesn’t change the fact that most seem to breathlessly await new GDP numbers, a measure of well-being of the affluent, who incomes over the past decade have grown even faster. Meanwhile reports on workers earnings get short shrift. I did a google search yesterday on the BlLS report and it was hard to find a mention! GDP reports get widely reported ASAP.

        What movers, shakers, and influencers (economists) talk about reveals their priorities…and it sure ain’t workers’ earnings.

          1. pgl

            “BLS’ announcement today that real average hourly earnings dropped 0.9% over the last year”

            Didn’t we debunk this in an earlier thread? And yet he still misrepresents the data?

    2. macroduck

      Johnny! You’re back, and just as misinformed as ever.

      So, economists are “fixated” on GDP or more generally on statistics that reflect the well-being of rich people? OK, here are what recent economics Nobels have been awarded for:

      Action theory
      Alleviating global poverty
      Climate change
      Technological innovation in macro models
      Behavioral economics
      Contract theory
      Consumption, poverty and welfare
      Market power and prices

      Now, what I don’t see here is a fixation on “GDP”. That’s because economists aren’t generally fixated on GDP. Wanna know why? ‘Cause that’s not their job. See, economists have jobs and they get paid for doing them just like anybody else. So a microeconomist won’t really give a rodent’s furry backside about GDP in the normal course of the workday. A labor economist (subset of microeconomist) won’t have time to be fixated on GDP. A behavioral economist will be too busy with behavior to think too very much about national accounts.

      Yes, here is a legitimate line of criticism regarding the use of GDP as a metric of welfare in policy making. That’s a criticism for policy makers. There is also a sort of low hum of outrage from people who don’t know anything about economists about how enamored economists all must be with a metric that ignores social justice and unpaid labor and pollution and resource use and stuff. And here you are, a card-carrying member of the don’t-know-nothin’-about-economics club, repeating a complaint about economists that you heard from somebody somewhere who had the right amount of earnest concern in their voice to make you want to repeat whatever they just said.

      Johnny, this is embarrassing. I see that you really, really want to be in here and make important noises about important things, but you aren’t. You are repeating earnest-sounding clap-trap you picked up from somebody who doesn’t really understand much.

      So, here’s a little trick that may help you avoid repeating clap-trap. If you can imagine yourself saying something from atop a soapbox, wagging a finger at all and sundry, don’t say it. Don’t write it. Don’t even whisper it to your gerbil. The desire to lecture those bad old economists about economics is what is getting you into these embarrassing situations.

      Lord knows, many economists need a good shaking, but you ain’t the guy for the job.

    3. pgl

      Another childish reply? I did read it and it was rather spot on. My point was that your claim that economists have not noticed is your usual stupid lie.

    4. pgl

      “As for wage suppression, how often do you read about that?”

      Well no one uses this imprecise term as we do not have wage ceilings. We do have monopsony power but of course an economic know nothing like you has no idea what that means.

    5. pgl

      Meyerson never used the term “wage suppression”. Now he did write this:

      ‘Both nations suppress unions, which is a primary reason why both nations have such towering levels of economic inequality.’

      This is not the same thing as a wage ceiling. Now as I said – monopsony power is allowed both in China and the US. Unions are a way to offset the abuse of monopsony power of course.

      But once again JohnH LIED about what his own source said. Well maybe you did not intend to mislead us. After all – you have proven over and over again that you really are too stupid to get what such terms even mean.

    6. pgl

      JohnH wants us to believe that real earnings have fallen and no one has mentioned this. Two seconds on Google pulled up the link below. Real average hourly earnings (JohnH’s term) were $11 an hour before the pandemic (1982-84 = 1 which of course JohnH will whine about) and now are $11.26 an hour.

      Of course we covered this the last time this troll tried to deceive us. In fact, I provided a CEA discussion of this issue. But I guess the top economic advisors to President Biden do not count?

      Come on – isn’t time we demand this troll stop lying over and over again? Oh wait – he will wait a week or so and repeat this lie again. He always does!,last%20month%20and%20-1.67%25%20from%20one%20year%20ago.

  8. ltr

    The Chinese, of course, have been careful and precise and clear about coronavirus cases from the time sample cases were genetically decoded by several labs and testing primers were produced in early January 2020 to the present. Symptomatic and asymptomatic cases are recorded, domestic and foreign * origins are recorded. Chinese coronavirus data is reported daily in several languages. I have repeatedly set down the Chinese data, including vaccination data, on the blog.

    As for coronavirus deaths in China, there have been 2 since the beginning of June 2020 when vaccinations began. Unfortunately, neither patient had been vaccinated.

    * Foreign origin means only that an infection was contracted outside of China, and detected on entry.

  9. ltr

    ““Even as China and the United States duke it out to determine which shall dominate the 21st century….”

    How unfortunate, since China repeatedly makes it clear that it will never think of dominating any century since such thought are inherently harmful to the country whose leadership thinks along such lines. Such a pretentious essay, when what China is actually about is of no evident interest to the writer.

    1. ltr

      It falls to me to point out the regrettable ways that China and the US economies are similar: 1) rapidly rising inequality and 2) wage suppression.

      [ This is of course incorrect and saddening. Imagine the Chinese completed a massive anti-poverty program that dramatically increased the well-being of millions on millions, all the while turning increasingly to the needs of moderate income families and the notion is of wage suppression.

      Beyond saddening. ]

    2. ltr

      Careless writing, for which I apologize and correct:

      “Even as China and the United States duke it out to determine which shall dominate the 21st century….”

      How unfortunate, since China repeatedly makes it clear that it will never think of dominating any century since such thoughts are inherently harmful to the country whose leadership thinks along such lines. Such a pretentious essay, when what China is actually about is of no evident interest to the writer. China is a country of more than a billion, with a highly productive and successful leadership. Even if the Chinese leadership is to be sharply criticized, at least for the sake of hundreds of millions of adherents learn honestly what the leadership is about.

      China firmly according to its leadership is not about dominating any century.

      1. Barkley Rosser


        China may not be about doimating “any century,” but it does seem to be out to dominate some other countries. One of those, which the PRC of course does not recognize to be a country, is neighboring Taiwan, the happiest nation in Asia and currently 26th in the world, compared to PRC at 86th out of 165 and below the world average. Taiwan has greater income and wealth equality, more rights for women, a functioning political democracy with strong civil liberties, a low level of pollution, and also a higher real per capita income. But the PRC does seem out to change all that for those uppity Taiwanese.

    3. Moses Herzog

      That’s an interesting opinion beings that Duterte came running back to America like a small child running back to its mother after the neighbor kid swiped his baseball bat. Who do you think the Philippines felt more bullied by??? In the inserted picture Duterte’s making the fist bump with the U.S. Secretary of Defense.

      Here is America’s Vice-President with Vietnam’s #1 leader:

      China also likes stealing land from India.

      Commenter “ltr” lives in an ulterior reality, in which the Chinese national flag is apparently draped over his eyeballs.

    4. macroduck

      Here is where Moses’ point about lying comes in; Just because Chinese officials say something, that doesn’t mean it’s true. It’s dishonest to suggest otherwise, but hey, that’s what they pay you to do.

      It’s just so weird that you think this blatantly nonsensical stuff is worth the time it takes to write. Please, if you must slavishly convey your masters’ propaganda, at least make it worth reading. Some intelligence, a bit of flair, to balance the dirty feeling one gets from reading it.

      1. macroduck

        If China has no aspirations to power, why is are Chinese warships paddling around off the coast of the Aleutian Islands? You know, U.S. territory, far from China, near to Russia?

        It is simply a lie to say that China has no hegemonic intentions, no matter how many times Chinese leaders say it.

  10. ltr

    “Dirty” has been a prime racial slur against the Chinese since the 1800s. “Dirty” was used in the New York Times in January 2020, to dismiss the Chinese successful use of quarantines to contain the coronavirus epidemic. Of course, the prejudiced stereotyping in the New York Times can be tied to a tragic failure to isolate especially vulnerable residents and staff at nursing homes where the effects of the epidemic became so harmful early on.

    A new paper from a team of Harvard researchers:

    September 9, 2021

    Estimates of COVID-19 Cases and Deaths Among Nursing Home Residents Not Reported in Federal Data
    By Karen Shen, Lacey Loomer, Hannah Abrams, et al

    Key Points

    Question  How many COVID-19 cases and deaths at nursing homes were missed in the federal National Healthcare Safety Network (NHSN) reporting system owing to the delayed start in required reporting?

    Findings  In this cross-sectional study of 15 307 US nursing homes, approximately 44% of COVID-19 cases and 40% of COVID-19 deaths that occurred before the start of reporting were not reported in the first NHSN submission in sample states, suggesting there were more than 68 000 unreported cases and 16 000 unreported deaths nationally.

    Meaning  These findings suggest that federal NHSN data understate total COVID-19 cases and deaths in nursing homes and that using these data without accounting for this issue may result in misleading conclusions about the determinants of nursing home outbreaks.

    1. macroduck

      Oh my Mao, she’s played the racism card again!

      Let me enlighten you about crude (mid)western racism, since you come at this from a perspective of Chinese racism. I’m no expert on the Chinese variety of racism, but I am fully versed in the (mid) western variety, so I can really help you out.

      You see, we (mid) western racists can’t tell one asian from another, so we don’t have a strictly Chinese stereotype. One size fits all; it’s less of a strain for our little racist brains. Central to the (mid) western stereotype is that the Japanese are very clean people and since we don’t bother differentiating between Japanese and Chinese, everybody gets to be clean! Congratulations.

      Now, here’s why I think it’s important for you to have a more accurate racist stereotype of (mid) western racism — All asians are really smart, right? So you need a smarter set of radial stereotypes.

      So when I write “dirty” I don’t mean Chinese. I really don’t. I mean you, specifically. Reading your crude nationalistic (so racist) blather gives one a dirty feeling.

  11. pgl

    Under an earlier post from Menzie – JohnH peddled the twin LIES that real wages have declined during the pandemic and that no economist uttered a peep. Back then his abuse of data was exposed and I provided a link to this discussion from the Council of Economic Advisers:

    Now he is peddling both of these lies here. We asked JohnH to read what the CEA wrote. I do not know if this lying troll bothered. But a wee request – can we insist that he finally read this excellent discussion before he reverts to his usual pattern of spreading really stupid lies?

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