Chinese Economy Slowing Down Less Quickly

A blog about business and economics.
Sept. 20 2012 8:03 AM

Chinese Economy Slowing Down Less Quickly

China's Purching Managers Index (PMI) edged up in the release overnight to 47.8 from 47.6 a month ago. That sounds like good news, and it's better news than the PMI falling, but it still means that Chinese industrial output is in the shrinking sub-50 range. It's just shrinking marginally less slowly.

The basic shape of the economic problems here are well-known—you simply can't keep growing exports at the pace China's been doing for the past 20 years, human capital can't be upgraded at lightning speed, and the Chinese domestic economy is riddled with distortions and corruption of various kinds that makes high-value investment challenging. The new dimension this summer is really the political angle, where the planned transition to the Yi Jinping presidency has been hit by his mysterious disappearance from the public eye perhaps due to medical problems. A country growing as fast as China has been is bound to slow down, but there's no need for it to tip into severe recession if policymakers deploy appropriate tools. But will they? Nobody really knows.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.



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