China: Unimpressive industrial production growth and rising inflation

11 Mar 2013 by Jim Fickett.

Over the weekend China released figures for inflation and industrial production growth through February. As a reminder, China only gives a year-over-year growth rate for industrial production, skips January, and in February releases a growth rate for January and February combined. Although the absolute numbers remain high, the current growth rate is quite low compared to the last few years, suggesting that the current model of stimulating the economy through cheap money for large capital investment projects may be losing its magic:

Inflation seems to be rising again, limiting the government's options for more money creation:

Overall, it looks as if those who have been predicting that China would slow to a more normal growth right might be proved right. For the rest of the world economy, the most important consequence of this outcome, if indeed it does materialize, would be a major slowdown in demand for iron, coal, and other commodities.

(See the Reference pages China inflation and China industrial production for background, sources, and past commentary.)