- Our CMI stood at just 3.1% in June, pointing to a further setback for China’s economy. This implies a much faster pace of deceleration than that reported by the official data.
- Until early last year, our measure of China’s economic growth rate tracked that reported by the official data. The two now diverge wildly.
- China’s policymakers must surely be aware that the economy is slowing far more dramatically than the official data suggest. That explains the raft of interventions we have seen over the past month or so, culminating in this week’s decision to abandon the RMB peg against the USD – a move that we have been telling our clients was more or less inevitable since the beginning of this year
The world means more to China than China means to the world. The US in particular has very little direct exposure, with exports of goods to China accounting for just 0.7% of US GDP, less than one third of the average across all developed economies. Moreover, should China’s dramatic slowdown precipitate a period of more sluggish growth around the world, it is worth remembering that the US is a relatively closed economy. Last year, as the graph demonstrates, it exported just over 10% of its GDP. The euro area as a whole, by contrast, exported more than 40% of its GDP.
Click here to read full article.