Remember the quaint idea popularised by Professor Michael Pettis that China must rebalance its economy from investment to consumption, or it will inexorably slow into a Japanese-style quagmire?
Apparently not! From Goldman.
The production-consumption gap is widening. Industrial production growthn accelerated to 5.2% yoy in August, while retail sales growth slipped to 0.4% yoy. Measurement issues suggest the supply-demand gap may be even wider than official data indicate. With policymakers focused on high-flying subsectors such as robots and semiconductors, there appears little urgency for broad-based easing, absent a sharp deterioration in the labor market, and the divergence could widen further.
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