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Despite national reporting that details steady-as-she-goes growth in China’s economy, the FT‘s Confidential Research team suggest there may be signs of trouble. Deteriorating wages and possible new fervor in government to reign in spending could be hard on the economy going forward. The team writes:
Our readings, based on monthly surveys of 1,000 consumers and nearly 1,000 businesses, suggest the widely expected economic slowdown is yet to take hold. But the devil in the details of our survey results does suggest that underlying conditions may be softening. Tightening credit conditions and a newly reshuffled leadership determined to rein in financial excess also point to slowing growth later this year.
Although headline consumer sentiment improved from February, measures of spending, including on durable goods such as cars and clothing, all softened. Asked if now is a good time to save, invest or consume, a record low number of respondents chose the latter in March.
While hiring managers in the construction sector reported a sharp rebound in demand for workers following the lunar new year holiday, wage conditions continued to deteriorate. The average reported monthly wage paid by companies across the construction, manufacturing and service sectors has fallen by more than 12 per cent since hitting a high of Rmb4,451 ($708) last June.
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Jeremy Jones, CFA
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