Posted by Mike Shedlock: Mish's Global Economic Trend Analysis

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China Manufacturing PMI 2013-04-22

Chinese Stocks Slump Most in Three Weeks as Manufacturing Slows – Bloomberg Reports:

China’s stocks fell, dragging the benchmark index down the most in three weeks, as data showed the country’s manufacturing growing at a slower pace. 

The Shanghai Composite has slumped 9.7 percent from a Feb. 6 high, on concern slowing growth will hurt earnings. China’s economy expanded 7.7 percent in the first quarter, missing estimates, as industrial production and fixed-asset investments in March fell short of forecasts. Rising Chinese home prices may limit scope for stimulus as President Xi Jinping seeks to prevent a real-estate bubble. 

“This has been a very narrowly based recovery, predominantly driven by infrastructure investment, but now even infrastructure investment is also apparently slowing down,” said Tao Dong, head of Asia economics excluding Japan at Credit Suisse Group AG in Hong Kong.


As I have said on numerous occasions, China’s infrastructure build-out is both ridiculous and unsustainable. Yet that does not stop for one second the cheerleading. 

For example please consider the Markit report headline for China Manufacturing that shows Operating conditions improve marginally in April

It is really tough to spin that stagnation, assuming you even believe it (I don’t), into something positive. Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC managed to do just that.

Qu stated “The HSBC Flash China Manufacturing PMI came in at a two-month low, but still managed to expand modestly in April, albeit at a much slower pace. However, new export orders contracted after a temporary rebound in March, suggesting external demand for China’s exporters remains weak. Weaker overall demand has also started to weigh on employment in the manufacturing sector. Beijing is expected to respond strongly to sustain the economic recovery by increasing efforts to boost domestic investment and consumption in the coming months.”


50.5 is “modest expansion”?! Would 49.5 have been “modest contraction?”

Let’s at least be honest about this. At best China is stagnating and this is in spite of an unwarranted and unsustainable infrastructure build-out.

Mike “Mish” Shedlock
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About Mike “Mish” Shedlock


Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific’s Investment Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

You are currently viewing my global economics blog which typically has commentary every day of the week. I am also a contributing “professor” on Minyanville, a community site focused on economic and financial education.

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