Sharp Slowdown in China Industrial Activity

The slowdown in Chinese industrial production growth ads to the existing concerns that China is going through challenging times, as Beijing aims for a soft landing and a transition of the economy, BIMCO reported, adding that the demand for dry bulk shipping and container shipping is bound to change accordingly.

China Industrial Production continued along the retreating path of the Purchasing Managers Indexes published a fortnight ago. The industrial production indicator, measured by the percentage change year-over-year, increased by 6.9% in August. This compares to an average for the previous 24 months of 9.4%. The growth level is the lowest since February 2009 when activity was under immense pressure in the early days of the global economic and financial crisis.

Chief Shipping Analyst at BIMCO, Peter Sand, said, "Today’s production data from China shows that the world’s second-largest economy is still struggling to keep up with past performance. The forecasted level of 7.5% GDP growth in China can be a challenge to reach with such a, by Chinese standards, sluggish level of industrial production.”

Sand continued, “Industrial production accounts for half of the Chinese GDP and is the part of the economy which is vital for shipping. A slowdown in manufacturing is a sign of lower demand, which could affect demand for shipping of containerized goods.”

“A lower activity level for utilities and mining companies suggest that less energy is required and construction activity may be slowing down too. In itself this is not positive for dry bulk shipping demand,” Sand added.

bimco.org