Our leading indicator for China has turned down further which adds to the impression of an overall weak turn in Chinese growth. We would still term the turning point as intact, but all components of our leading indicator recently came in with negative readings.
This is disappointing in light of the fact that while China had a clear cyclical bounce off of a very low level in mid 2012, we have not seen any follow through.
We note that real M1 growth is still on a strong upward trend which is positive, but in the aggregate we are forced to temper our optimism on growth in China.
More clarity on the money supply growth front will be available once we move into March and April readings, where the New Year seasonal effects will be past us. Economic releases for these two months are important to watch then to gauge the direction of the Chinese economy.