The Chinese Have Their Own Policy ‘Dots’

Retail Sales are substantially more concerning, which otherwise you’d think authorities would be ramping up their “stimulus” efforts given how they’ve made China’s consumers the priority of whatever “quality” growth might be achieved. Yet, again, no. The “quantity” growth in consumer spending since last year’s deep recession pales.

According to the NBS, retail sales in May 2021 increased only 12.4% when compared to May 2020 when overall sales had been 2.8% less than in May 2019. The 2-year (compounded annual) change in retail sales, therefore, less than 5% for eight out of the past twelve months. Even those other four the 2-year change had been only near 6%.

Prior to the past few years, retail sales growth in modern China had on only one occasion come out lower than 7%; before 2018, there had only been a tiny few months below 10% and those triggered serious concerns and not just in Xi’s mind.

The Chinese economy is operating at a materially lower level, already not good, more and more confirming that whatever rebound is going to happen probably already did. Finally, Xi’s top level has continuously declared how they aren’t going to do anything about it; on the contrary, they’ve been scaling back for some time now. Not just speeches and words, though, more evidence of serious (lack of) action.

So, the Fed thinks downside risks to the US economy beyond this year have abated – COVID-wise, that’s probably accurate. Other risks, global risks like those which had wrecked everything a few years ago, not so much.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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