China's Economy Weakened in March, Despite Official Data, Says Derek Scissors

Economic Slowdown in China

• 📉 Data from January and February showed official economic improvement in China, but this was largely due to revising previous base numbers downward.
• ⚠️ Our data indicates that in March, the Chinese economy grew more slowly than in previous periods, despite still showing growth.

Consumption and Retail Sector Weakness

• 🛍️ The retail sector, including autos, food, and luxury goods, was the worst-performing area tracked, showing weakness compared to both the previous month and the same time last year.
• 📉 Deflationary pressures were observed to be worsening, particularly within the retail sector.

Property Market and Supply Side

• 🏗️ While the property market has shown some improvement, it is still not considered good, merely better than its previous state.
• 🏭 The supply side of the Chinese economy consistently performs better than the demand side.

Global Trade and Tariffs

• 🗣️ Chinese President Xi Jinping urged global executives to defend trade and stated that globalization is unstoppable, emphasizing their responsibility in maintaining the world's economic order.
• 🦊 The appeal to the EU to band together against U.S. tariffs is likened to a fox talking to hens, as the EU also faces inequitable trade practices from China.
• 🇪🇺 Europe is perceived as being 5 to 10 years behind the U.S. in recognizing and reacting to Chinese trade practices.

Corporate Impact of Trade Policies

• ⛓️ Companies are caught between directives from China's Xi Jinping and U.S. President Trump, both discouraging them from passing on cost increases to consumers or suppliers.
• ✈️ This situation is expected to spur companies to seek alternative production locations outside of China to avoid tariffs and being trapped in this dilemma.

EU's Stance on China

• 🌍 While Europeans have ideological issues with China regarding human rights and the environment, they are not as threatened by China as East Asian allies or the U.S.
• 🤝 This lack of perceived threat may lead to greater economic cooperation with China, even if it seems questionable from an ideological standpoint.