China’s Imports Drop, Japan’s Economy Slows

Despite the recently announced $157 billion infrastructure spending based bailout, China’s economic decline continues…

From Bloomberg, (bold mine)

China’s imports unexpectedly fell and industrial output rose the least in three years, signaling more stimulus may be needed after the government last week said it approved subway and road projects across the nation.

Inbound shipments slid 2.6 percent in August from a year earlier as exports rose 2.7 percent, the customs bureau said in Beijing today. Production increased 8.9 percent, the National Bureau of Statistics said yesterday. Inflation accelerated for the first time in five months.

The data underscore risks that full-year growth in the world’s second-biggest economy will slide to the lowest in more than two decades, undermining support for the ruling Communist Party before a once-in-a-decade leadership transition due later this year. The rebound in inflation, excess capacity in some industries and banks’ bad debt risks from past monetary easing highlight the potential cost of ramping up stimulus efforts…

China’s trade surplus was a more-than-estimated $26.7 billion as imports fell for the first time since 2009 outside of the Lunar New Year, today’s report showed. Fixed-asset investment growth in the first eight months eased to 20.2 percent, yesterday’s reports showed.

Slowing imports corroborates signs of a steepening slowdown in China’s economic activities.

But for the steroid starved mainstream, inflationism has been never enough. People simply adore the idea of turning stones into bread.

However a rebound in consumer price inflation may put a kibosh on current bailout policies. (chart from Tradingeconomics.com)

Nonetheless, China’s economic deterioration gives more evidence of the seminal phase of the global stagflation dynamic

Well bad news has not been limited to China though, Japan’s economy has reportedly slowed materially.

From the same article…

Japan’s economy expanded in the second quarter at half the pace the government initially estimated, underscoring the risk of a contraction as Europe’s debt crisis caps exports, a government report showed today.

Gross domestic product grew an annualized 0.7 percent in the three months through June, less than a preliminary calculation of 1.4 percent. The nation’s current-account surplus fell to 625.4 billion yen ($8 billion) in July, the lowest for that month since 1996, according to a finance ministry report and Bloomberg historical data.

Both developments exhibit the ongoing global economic slowdown dynamic which stock markets seems to ignore.

The momentum from last week’s rejuvenated equity markets from the combined announcement of bailout packages from ECB and China has so far been carried over today.

It would be interesting to see how Chinese authorities will respond to sustained news of pronounced downswing of their economy.

China’s massive gold imports which in 2012 according to Zero Hedge, has “imported more gold than the ECB's entire official 502.1 tons of holdings” and the current inflationist bailout policies seem as conflicting political moves.