Thread by @michaelxpettis

1/10
In October China's economy continued to rebalance towards consumption, as in recent months, but much too slowly to make up for the deep worsening of the imbalance that occurred last year. Retail sales were up in October by 4.9% compared to last year.

reuters.com/world/china/ch…

2/10
They rose by an average of 4.6% a year compared to 2019. This was higher than consensus expectations, but still fairly low. During the first ten months of 2021, retail sales were up by 14.9% compared to last year and by an average of 4.0% a year compared to 2019.

3/10
Industrial production was up in October by 3.5% compared to last year and by an average of 5.2% a year compared to 2019. This was also higher than expectations, but also still fairly low.

4/10
During the first ten months of 2021, industrial production was up by 10.9% compared to last year and by an average of 6.3% a year compared to 2019.

5/10
Whether you look at just at October numbers or year-to-date numbers, retail sales – a proxy for consumption – grew faster than industrial production in 2021, but growth in the former still seriously lags growth in the latter in the two years since 2019.

6/10
Although the growth data came in above expectations, the stock market was still down today, probably because additional data suggested that property prices in China were broadly down in October. New home prices declined by 0.25%, after a 0.06% decline in...

7/10
September, and second-hand homes declined by more. What makes this risky is that if it doesn’t turn around soon, and leaves Chinese homebuyers convinced that the days of ever-rising prices are permanently over, it will cause a substantial deflation in future demand.

8/10
The bright spot in the data of course continues to be trade – exports far more than imports, which reinforces the point that production is growing faster than consumption.

9/10
In October exports grew in RMB terms by 20.3% year on year, and imports by 14.5%. Not surprisingly, October’s monthly trade surplus was the highest China has ever recorded.

10/10
In the first ten months on 2021, exports were up 22.5% percent year on year while imports were up 21.8%, to generate a trade surplus of roughly 3.6% of GDP.