China is “by far” the world’s “best-performing big economy” this year, says The Economist. GDP grew by 3.2% in the second quarter compared with a year before. A recovery is now well under way following a 6.8% fall in the first three months of the year. Economists treat China’s GDP statistics with justified scepticism, but “alternative indicators” such as coal consumption and traffic congestion tell a similar story.
The recovery is being led by manufacturers, says Jonathan Allum in The Blah! newsletter. Industrial production rose by 4.8% year-on-year in June, but retail sales undershot expectations, registering a 1.8% contraction. That makes this recovery dependent on selling products into world markets, not ideal at a time of weak global demand and a growing backlash against imports from overseas. “How much kit will Huawei [export] to the UK in the future?”
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The Institute of International Finance’s Global Debt Monitor reports that total debt in China across households, governments and corporations started the year at just over 300% of GDP, but is now “fast approaching 335% of GDP”.
The backing of a one-party state means that China’s debt bubble is very unlikely to pop, writes Mike Bird in The Wall Street Journal. But that doesn’t mean it does no harm. Research shows that misallocation of capital – especially into the bloated housing sector – acts as a slow-burning drag on productivity. With GDP per capita of $10,262, China has miles to go before it catches up with advanced economies. Overinvestment in real estate won’t help.
Cooling the rally
The positive data has made it easier for the authorities to tout a “healthy bull market”. The CSI 300 is now up more than 12% for the year-to-date. Retail investors make up 80% of trading, so sentiment rules the roost. The surge has brought back “bad memories” from 2014-2015, says Craig Mellow in Barron’s. Domestic shares “more than doubled in seven months” before losing 40%. Yet regulators seem to have learnt their lesson, moving to tighten margin requirements to cool the euphoria. That means this rally may not have much further to run. But in the long-term Chinese markets could become less of a roller-coaster ride.
-
Best places to live in England and Wales in 2026 – and how much they costCriteria like value for money, natural beauty, good schools, jobs and a high quality of life are key for those looking at areas to buy a house – but how much will it cost you to live in a high ranking town or city? We reveal the best places to live in England and Wales.
-
London house prices: Is the capital's property boom over?Buyers and investors have always been drawn towards the capital’s property market. But as house prices stall, is the market as lucrative as it once was and are buyers and investors still interested?
-
What turns a stock market crash into a financial crisis?Opinion Professor Linda Yueh's popular book on major stock market crashes misses key lessons, says Max King
-
ISA reforms will destroy the last relic of the Thatcher eraOpinion With the ISA under attack, the Labour government has now started to destroy the last relic of the Thatcher era, returning the economy to the dysfunctional 1970s
-
Why does Trump want Greenland?The US wants to annex Greenland as it increasingly sees the world in terms of 19th-century Great Power politics and wants to secure crucial national interests
-
Nobel laureate Philippe Aghion reveals the key to GDP growthInterview According to Nobel laureate Philippe Aghion, competition is the key to innovation, productivity and growth – here's what this implies for Europe and Britain
-
'Investors should brace for Trump’s great inflation'Opinion Donald Trump's actions against Federal Reserve chair Jerome Powell will likely stoke rising prices. Investors should prepare for the worst, says Matthew Lynn
-
The state of Iran’s collapsing economy – and why people are protestingIran has long been mired in an economic crisis that is part of a wider systemic failure. Do the protests show a way out?
-
Hiring new staff for your business? Help is availableHiring more employees is a costly business, but help is available from the government, says David Prosser
-
'Expect more policy U-turns from Keir Starmer'Opinion Keir Starmer’s government quickly changes its mind as soon as it runs into any opposition. It isn't hard to work out where the next U-turns will come from
