The Rising Influence of Rising Affluence

[DewDiligence]

China’s economy slowed in April, and this is assuredly part of the reason
such mining’s stocks as CLF and VALE have been hammered lately. Still,
investors ought not to unduly emphasize one month of data, IMO. Moreover,
there are remedies, as noted in the highlighted text at the end of the quoted
passage below.

http://online.wsj.com/article/SB10001424052702304203604577396954063628584.html

China's economy grew at 8.1% in the first quarter, compared to the year-earlier period, its slowest pace of growth since the spring of 2009, and analysts had widely expected a rebound in the current quarter. But that now looks unlikely and several analysts downgraded their forecasts. "We were wrong," said Lu Ting, Bank of America's China economist, who cut his second quarter forecast on Friday to 7.6%, year-over-year, from 8.5%.

… A weaker China means fewer imports of raw materials from Latin America, Australia, Indonesia and Africa, agricultural goods from the U.S., and capital goods from Europe, among other products [duh]. China's imports from the U.S. have grown just 2.5% so far this year.

… Growth in industrial production dipped to 9.3% in April from 11.9% in March, the lowest level since May 2009. That fall in output reflected broad based weakness across investment, consumption, and exports—the three main drivers of China's growth.

Growth in electricity output, often seen as a proxy for the health of China's industrial sector, fell to 0.7% year-to-year, down from 7.2% in March.

With the data markedly weaker than expected, Chinese policy makers are likely to accelerate efforts to ease policy. In contrast to the U.S. and many European governments, China's public finances are strong, creating space for a fiscal stimulus.