Monday, January 05, 2009

The Great China Blackout

Power consumption is a decent indicator of economic activity. Here is what it has done in China in recent years:

2005: 24.24% increase
2006: 33.13% increase
2007: 14.93% increase

And Nov. 2007- Nov., 2008? According to Barron's, electricity consumption in that period fell 9.6%.

Whatever the official data say, the China bubble is popping, hard. Just as some of us have long thought, even if the timing, and the global impact, are different from what we expected.

I thought then, and I still think, that the combination of Chinese repression, 20 years of established growth generating hundreds of millions of middle-class people with first-hand memories of the bad times, and Chinese nationalistic pride will allow the government to ride this out. But we are about to find out.

Hat tip: Ambrose Evans-Pritchard, for alerting me to the China power-consumption data.

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