Worldview


CHINESE WHISPERS


Those banking on China to prop up the global economy would do well to look at worrying figures from the country’s property industry


KEY


FACTS  Consumer indicators show a disconnect between retail sales, which accelerated late last year, and urban household consumption, which slowed.


 Property indicators confirm inventories of unsold properties are rising. (Page 19)


With much ofEurope teetering on the brink of recession, can China rescue the global economy? Not if property sector weakness continues, says Capital Economics. The Capital Economics China Activity


Proxy (CAP) provides further evidence of a spurt in economic activity at the end of 2011. But property construction seems to be slowing and, for that sector at least, worse lies ahead. The CAP is our attempt to track the pace of growth in China without relying on official GDP figures. It is based on a set of low-profile indicators chosen to reflect


activity across a wide section of the economy. The most recent data, for December, signal a strong end to last year. Indeed, month-on- month growth was the fastest since January 2011. Quarter-on-quarter growth appears to have bottomed out, signalling that the economy is stabilising. Year-on-year growth also picked up


sharply in December. The broadest measure of domestic economic activity


– the volume of freight being transported around the country – still looks relatively strong. Seaport activity – a


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