Heavy industry falls sharply in China

Steel prices in China have fallen 12 percent in the first five weeks of this year — almost as much as in all of last year — as demand dwindles.

China’s imports of rubber, oil, iron ore, and other industrial materials also fell sharply in January. And the global market for bulk freighter charters is in free fall, already below levels in the worst days of the global financial crisis in late 2008 and early 2009.“In the past two months, it has been more or less a vertical correction, and this is a proxy for China,” said Basil M. Karatzas, a Manhattan ship broker.

Heavy industry in the country, which has the world’s second-largest economy, is suffering a much sharper downturn than was apparent or expected even several weeks ago. That slowdown seems to be mirrored to a lesser extent in other sectors. But the full scope of China’s economic weakness is obscured by limited data, as the country prepares for a nationwide weeklong holiday beginning Feb. 18, in observance of the Lunar New Year.

“It’s too early to be saying we’re moving toward disaster, but there’s nothing in this data to be cheery about,” said Louis Kuijs, chief China economist at the Royal Bank of Scotland.

Following its standard practice, China’s National Bureau of Statistics will not release a wide range of monthly economic statistics for January — a month in which the timing of the Lunar New Year, from late January to mid-February, can distort figures. So investors, business executives, and others will get only limited, partial figures on industrial production, real estate investment, retail sales, and other crucial barometers until mid-March, when the figures for all of January and February are scheduled to be released.

China has many tools to halt a slowdown, though all of the tools have potentially undesirable side effects. The banking system is still under tight central government control and can be told to step up lending further. Overall credit, though, has already grown faster as a share of economic output since 2009 than practically anywhere except Ireland. Some restrictions on housing market speculation have been lifted, at the risk of making homes more expensive.