Dienstag, 10. März 2009

Crystal-ball gazing: China's economy

China's Q4 GDP supposedly grew 6.8 % yoy. Meanwhile, yoy electricity use contracted 7 % in November and 9 % in December.

Considering the pronounced weakness in energy-intensive sectors such as steel, cement and construction, a drop in electricity use isn't necessarily at odds with overall GDP growth (though it's a bit hard to say, because industrial heat generation doesn't rely on the electricity grid, but on other sources, mostly coal-fired ovens).

Still, the extent of the gap is strange: Household electricity use should be quite constant, so the drop must be due to a very sharp decrease in heavy-industrial output. Makes 6.8 % yoy GDP growth sound a bit unlikely.

And now we are told yoy electricity use in Jan/Feb was still down 3.7 %. But steel output is up 2 %, and cement output 17 %.

So if energy-intensive heavy-industry output is indeed up, how come overall electricity use is still down?

Assuming the numbers are correct, the only possible explanation is a sharp slow-down in light manufacturing.

The 50 % Jan/Feb yoy decrease in Taiwan's exports to China points in the same direction.

Doesn't bode well for Q1 GDP, I'd say.

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