How to explain the discrepancy between China’s expanding PMI and slowing Industrial Value Added?
It’s possible that rising input costs, evident by surging commodities and PPI, are recognized earlier by accounting rules while revenue recognition is slower. The same reason as PPI often leads CPI.
It is also possible that rising prices start to curb demand. But we won't know for sure till a few more data points later.
I won't accept the explanation from the analyst community that last year’s base was too high. This higher base effect should have been factored into this year’s forecast.
China retails sales y/y growth slows further. 10 months out of 11 deceleration. It shows restructuring towards consumption based growth is challenging.
Meanwhile, investment growth also slows, and new loan growth is negative. More work needs to be done to maintain growth target this year.
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