Slower Credit Growth Drags on Chinese Economy
Official statistics might show steady GDP expansion, but we think growth is decelerating as household debt rises.
Dan Rohr: Despite the appearance of steady growth in official GDP and other headline measures, China's economy has likely been cooling for the past several months. Morningstar's power proxy, which sums GDP-weighted sectoral electricity demand to estimate changes in total economic output, has signaled slowing growth since September. Deceleration is also evident in other alternative measures. For example, our raw-materials-based proxy of fixed-asset investment suggests spending growth slipped from about 3% in the third quarter to nearly zero in the fourth quarter.
That's important because fixed-asset investment accounts for 44% of Chinese GDP. We're also seeing some signs of softness in consumer spending, although not nearly to the same extent that we are on the fixed-asset investment side of the economy.
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