Thursday, June 30, 2016
The (Quiet) Business of China
China opts to slow down a bit to restudy variables, just like the traditional Chinese trader. New figures showed the economy expanding by 7.7 percent in the year to the first quarter, marginally slower than the previous quarter’s pace and notably slower than expected. The loss of momentum confounds, given the spectacular surge in credit in January and March. However, that is not entirely weird. China's growth, buffered by its manufacturing/services industry, also obscured two encouraging trends that may matter hugely for China’s future. Consumption, although still low, made a bigger contribution than investment to China’s growth in the first quarter. Even more notable, services have trumped industry’s contribution to GDP in the past three quarters.