For 30 years, the economy of China has been leading the world and if you look where China was to where it is now, you can see why. Besides being the manufacturing center of the world, China’s cities and trains and roads have all been upgraded. The people live in vast apartment complexes and China was expecting even more people to live in cities they built cities where few live or are called ghost cities. China has a very strong government which sets 5 year plans and all agencies fall into line or the heads of the agencies are replaced quickly. For the past decades, people outside China were used to see high growth rates from the country. Then COVID happened and the machine was shut down, everyone expected the economy had changed or when restrictions were removed, the economy would bounce back to where it had been and continue to grow.

In an article by Ellen Zhang and Joe Cash of Reuters, China’s April industrial output and retail sales growth undershot forecasts, suggesting the economy is on a whobbly post COVID recovery.

Industrial output grew 5.6% which was better than the 3.9% from a year earlier, but analysts were expecting a 10.9% rate. Retail sales were up 18.9% up from 10.6% a year earlier, but analysts were expecting 21%.

Normura economists said year over year growth was elevated, thanks to a low base, but it looks like there will be material decline in growth.

China’s central bank kept the interest rate unchanged as markets expected, but markets are expecting more monetary easing in the months to come.

Linking to dividend paying stocks, if China was a stock market, for decades a person could pick almost anything and would have likely done very well. With the slowdown, a person has to be selective to be successful. One of the methods to be selective is to focus on the profitable companies which pay dividends rather than the companies which should grow. Investing in profitable companies is never a bad thing, but as soon as there is slowdown, your wisdom speaks volumes.

There are more questions than answers, till the next time – to raising questions.