In this handout photo released by Uzbekistan Foreign Ministry, Chinese President Xi Jinping attends ... [+]
Communist China under premier Xi Jinping is wilting fast.
The economy, already under pressure so far this year, looks set to get even worse, according to a recent report from London-based consulting firm Capital Economics.
Capital kicks off with the following blistering assessment of the situation:
- “The financial world’s focus on a generational surge in inflation in advanced economies is stealing attention from a generational slowdown in China that is arguably of much greater importance for the long-term global outlook.”
In other words, ignore China’s economic worsening quagmire at your peril.
Already we know that China’s steel production is falling, down 5.7% in the year through August, according to the World Steel Association. That country has long been the world’s largest producer of steel so the decline is meaningful on a global scale.
Worse still, only two of the top global producers performed worse over the same period: Russia and Turkey. Both are economic basket cases.
The hits keep on coming. Exports from Korea to China fell during the first three weeks on September, the Capital report says. At the same time, Korean exports to the U.S. grew.
- “This may be a sign that global demand for the consumer goods that China produces – and to which Korea provides inputs earlier in the production chain – is softening,” the Capital report states. My emphasis.
Put simply, retail customers globally are pulling back and thats already hurting China.
Monthly data for August show declining retail sales inside China as well and Capital expects further declines in September.
When the experts put all this together the outlook is bleak.
- “We recently lowered our forecast for this year’s officially-reported GDP growth rate to 3% from 4% – the government’s 5.5% target set in March has been quietly abandoned – but in reality don’t expect the Chinese economy to grow at all.”
Put another way, China’s growth under Xi likely dropped to zero from regular robust gains.
It’s not the sort of achievement most leaders want.
