China lendSept12.pngThe blog continues to hear very depressing news from its contacts in the market about the state of China’s economy. The most depressing report is that GDP growth may actually have stalled in recent weeks. And the latest figures for electricity consumption add to the general sense of gloom.

These are one of the more reliable sets of economic data in China (along with bank lending). And as the chart shows, monthly consumption (green line) has been slowing for some time:

• This time last year it was rising at ~10%
• But it was half this level at ~4.5% in Q2
• In August it rose just 3.6%

Equally, the comments of the State Electricity Regulatory Commission are not encouraging.

It suggested that ‘the country’s slowdown may continue’, and added that ‘at present, the global economy is gloomy and exports are not performing well’. In addition, it said chemicals, construction, metals and non-ferrous metals all saw falls in electricity demand. Whilst consumption also fell in 6 regions – Hebei, Liaoning, Jilin, Heilonjang, Ningxia and Henan.

This slowdown parallels the general trend of monthly lending (red column), as discussed last week. And there remain few signs that the government feels in a position to undertake any major new stimulus packages. It could well be that, as the blog suggested last December, China’s Minsky Moment may now be underway.