China's latest economic data is not good. Industrial production increased at its slowest pace since 2008, rising 6.8 percent in the first two months of the year compared with a year ago.
Retail sales also slowed, increasing 10.7 percent in the first two months of 2015 compared to 11.9 percent in Dec. The downturn in the overheated Chinese housing market is apparently taking its toll on domestic demand.
Chinese officials lowered the official GDP growth target for this year to about 7 percent, the slowest expansion in a 25 years. The IMF forecasts this rate will be 6.8 percent in 2015 and 6.5 percent in 2016 - lower than India's projected growth rate.
Voya Financials notes in a report on Wednesday:
- Despite these indications of a slowdown, Chinese markets are rallying. Investors should realize by now that bad news is often good news because it means more stimulus.
- China has already cut rates twice this year but the latest round of economic data suggests more aggressive policy action is forthcoming to stem the downturn.
