Economic indicators

Pundits are working overtime trying to find more novel, more telling pieces of evidence to help them predict how things are going to go for China in this meltdown year. Oddly enough, I don't think anyone has actually tried reading chicken entrails yet, but it can only be a matter of time.

I gather the People's Daily ran a story a little while ago suggesting that robust firework sales in the run-up to this Chinese New Year holiday were proof of continuing buoyancy in the Chinese economy (ha! more of the phoney optimism that is the country's principal manufacture at the moment!).

Even if this were true, I'm not sure that I would take much comfort from it. The Chinese fetish with fireworks is very much a whistling-in-the-dark superstition: the point of it is to invoke good luck for the year ahead by frightening away all the 'evil spirits' that might bring you the other kind of luck (evil spirits afraid of loud noises?? well, that's the theory). Even if folks are getting anxious about spending their money in such uncertain times, I'd still expect them to have a big blow-out on fireworks at this time of year..... maybe even bigger than when people are mostly feeling fairly confident and prosperous.

However, I don't think that has happened this year. Apart from the huge splurge on New Year's Eve, things before and after that have been mostly very quiet compared to the last few years. And a foreign journalist I spoke to the other day revealed that in a straw-poll he'd conducted of firework vendors around the city, everyone complained that sales were well down this year - some were saying by as much as 30% or 40%.

And this despite a major price war between the main distributors in Beijing this year.

Also, in the last couple of days, several large tents have appeared on street corners around the city selling fireworks for the last 4 days of the holiday over this weekend (the Lantern Festival, the official end of the main phase of New Year celebrations, is on Monday). I've never seen this before; and I think it suggests that the manufacturers have a lot of spare stock on their hands this year and are making a special push to try and get rid of it.

So - my view is that, up to now at least, firework activity has been significantly less this year than last. But is that a good sign or a bad sign?

I think.... if people don't even want to spend money to ward off ill fortune and try to improve their prospects for the year ahead..... then things are very, very bad indeed.