All key indicators of China's money supply are flashing warning signs. The broader measures have slumped to stagnation levels not seen since the late 1990s.
By Ambrose Evans-Pritchard
Narrow M1 data for April is the weakest since modern records began. Real M1
deposits – a leading indicator of economic growth six months or so ahead –
have contracted since November.
They are shrinking faster that at any time during the 2008-2009 crisis, and
faster than in Spain right now, according to Simon Ward at Henderson Global
Investors.
If China were a normal country, it would be hurtling into a brick wall. A "hard-landing"
later this year would already be baked into the pie.
Whether this hybrid system of market Leninism – with banks run by Party bosses
– conforms to Western monetary theory is a hotly contested point. The issue
will be settled one way or the other soon.
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