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female condom There are clearly problems with the Chinese economy. Leverage is at extreme levels in absolute terms (with total debts of around 230pc of GDP, according to Credit Suisse) and well above the trend growth rate of the past 25 years. No wonder the interbank lending rate has been so volatile in recent weeks. Despite this massive growth in credit, however, manufacturing indicators are weakening and with the labour force contracting – so putting further upward pressure on wages – China is becoming less and less competitive. Does this matter? Clearly it is a drag on sentiment, and it will continue to weigh on sectors and companies exposed to the investment and export slowdown, such as mining equipment companies and capital goods manufacturers.
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