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Chinese stocks see their biggest slump this month after industrial production stalls

A worker cuts steel bars at a railway bridge construction site in Lianyungang, Jiangsu province.
Reuters/China Daily
China’s going to need more sparks than this to kickstart growth.
By Melvin Backman
Published Last updated This article is more than 2 years old.

China’s benchmark SSE Composite stock index fell nearly 2.7% in Monday trading, the biggest dip since the global market meltdown late last month.

The bad news this time? Industrial production is continuing to slow down. This month’s figure showed 6.1% growth from a year ago. That’s a bit faster than the previous month (6%), but the clear trend is downward.

Though fixed investment has a more uninterrupted slide (as Bloomberg notes), Capital Economics put some of the blame on residual effects of the Tianjin warehouse explosions and factory shutdowns ahead of military parades earlier this month celebrating the end of World War II. Further, the research group thinks there are signs of life in the “real economy” away from volatile financial markets, with infrastructure spending up and real estate recovering.

“The upshot is that while China is still undergoing a structural slowdown as part of its transition toward a more consumption-driven economy, we believe that the short-run downside risks are overstated,” its analysts wrote.

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