Economics: China Soft Landing

(Drivebycuriosity) - There is a lot talk about a coming crash in China but the newest data from the economic front show that China`s economy is managing the soft landing. This night we learned that China`s retail sales grew 8.2% in December, faster than in November (plus 8.1% economics). We also heard that China`s industrial production rose 5.7% in December after gaining 5.4% in November.

(tradingeconomics )


The data suggest that the slowdown is already slowing. They also show that China´s economy is increasingly driven by consumer spending (like the US economy). Until recently China`s economy was based on manufacturing and exports to the rest of the world. But the huge country is growing up and  is changing from an industrial country - which relies on exports - into a modern economy like the US which is dominated by services and focuses mostly on the domestic market. For years imports & retail sales have been growing faster than exports & industrial production. Therefore a growing part of the national production is consumed in China, which reduces the country´s dependence from global markets.

The retail sales are a part of the services sector which accounts for more than half of the Chinese economy and is therefore more important than manufacturing (like in the US). Last night`s consumer data confirm the Purchasing Manager Indices for the service sector ((Non-Manufacturing PMI ) published at begin of the month, which signaled an accelerating growth in the Chinese service sector (driveby). Forget the China crash calls.