China moderating

12 May 2012 by Jim Fickett.

On Friday the National Bureau of Statistics in China reported a number of statistics. Year-over-year growth in industrial production slowed to 9.3%:

On the one hand, this is down to levels last seen in 2009, and so there was much hand-wringing in the press about a “slowdown”. On the other hand, growth rates that have come to be seen as normal for China are arithmetically impossible to continue. Even at an annual growth rate of 9.3%, production would double every 8 years, and China would have essentially all of world production in 20 years. How can an economy dependent on exports also be essentially the only economy? So the long-term trend in the growth rate is down, and the only question is how well the transition is managed.

Fortunately, the moderation in growth seems also to be resulting in a moderation of inflation, though the absolute level of food inflation remains high (and very painful for the poor):