IInterviewed by CNN and Ling Ling Wei Today, she doesn’t say “recession,” but the idea is there (“struggling, ‘big times'” I think is the phrase). Here’s what industrial production looks like ahead of construction through May and ECRI’s recession date (peak to trough):
figure 1: Pre-construction industrial production in China (black, left log scale). Recession peak-to-trough dates as defined by ECRI are shown in light blue. Source: OECD MEI via FRED, ECRI.
Clearly, industrial production growth has slowed (IP is shown on a logarithmic scale, so a falling slope indicates slower growth). Early deflation Suggesting a recession, or at least a slowdown (if one believes the Phillips curve, although a Phillips curve of strengthening expectations and inputs suggests caution). Does this mean China is in recession? Who decides what a recession in China is? (see Discussion Frankel here. ) compares ECRI with OECD indicators.
figure 2: China recession dates (peak to trough), shades of blue from Economic Cycle Research Institute (ECRI) (top panel), shades of blue from OECD (bottom panel). The OECD series ends in September 2022, indicated by the dashed red line. Source: ECRI, OECD through FRED.
Clearly, there is little agreement on the definition of a recession (for a list of sources of recession calls by country, see this postal).
We’ll know more in a few hours (10pm ET) as a slew of Q2 data is due, including GDP and industrial production, fixed assets, and more. GDP YoY growth consensus is 7.3% vs 4.5% % previously, which sounds pretty good, although the q/q consensus is 0.5% vs 2.2% previously (not annualized). Industrial production growth in June is expected to be 2.7% year-on-year, which is expected to be 3.5%; retail sales are expected to increase by 3.2% year-on-year, which is expected to be 12.7%.
We already know that consumer prices are flat and producer prices are down.
image 3: China CPI (black), core CPI (tan) and PPI (green), all logarithmic, 2019M12=0. ECRI defines the peak-to-trough dates of recessions as pink. source: Kose/Unworried – World Bank IMF, IFS, both updated using TradingEconomics; and author’s calculations.
