IP Growth Slowing in China – More to Come?

Shipping economists tend to prefer Industrial Production (IP) over GDP and other indicators as IP is more relevant to things that go into ships. And a lot of things that go in ships are made in China, so it is worthwhile keeping an eye on China’s IP growth in particular. The China Daily website reports that IP growth in China fell to 9.2% (monthly growth year-on-year) in July. The forecast for July was for a small increase to 9.7% from the 9.5% in June. This is the fourth month in a row IP growth in China has been recorded in single figures. This is worrying, as the pattern shows that once Chinese IP growth dips into single figures it tends to stay there for at least eight months (see chart – Mar 1999 to Jan 2001, July 2001 to Feb 2002, Oct 2008 to May 2009).

Therefore, we could have another four months at least of single digit IP growth in China, which is not good news for shipping.

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