R-CAT: Monitoring China’s Industrial Slowdown

The extent to which China’s economy is currently slowing is an increasingly important question for financial market investors, companies engaged with China, and global policy-makers. Rhodium’s proprietary indicator of industrial output in China, the Rhodium China Activity Tracker (R-CAT), is a useful supplement to other output data series as an indicator of cyclical activity. The R-CAT currently shows that aggregate industrial production declined in year-on-year terms in September (-0.4%) for the first time since March 2020.

With export manufacturing still providing a boost, the slowdown in industrial output is concentrated in China’s property sector, and components for infrastructure investment. But power shortages in September hit export industries as well, and consumer goods output has trended down along with the broader economy. The current slowdown in industrial output is comparable to what took place in 2014 and early 2015, but not as severe as the downturn in late 2018—at least not yet.

Posted November 1, 2021
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