Yesterday it was announced that China’s manufacturing for December came in below expectations. However, this shouldn’t be too much of a surprise as Chinese manufacturing has been flailing away for about three years now.

As the chart above shows, Chinese manufacturing was declining about three years ago and then for the last two has been skidding along the breakeven line that separates economic expansion and contraction.

What is really astounding is that this has occurred during massive Quantitative Easing in the U.S. which spills over its borders and floods the world’s economy with liquidity. Also, over this period, China has been extremely loose with credit.

Most people now conclude that China is an important component of the global economic engine. If U.S. Quantitative Easing combined with lax lending standards in China can’t spark growth in Chinese manufacturing, then what will?

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