|May HSBC Flash China Manufacturing PMI at 49.6 vs 50.4 in April|
Source: Markit Economics
So wouldn't market forces reprice all of the "mal-investment" created by the Chinese government? Governments and central banks are turning into economic extremists this year. It's starting to get very interesting.
China Plans to Reduce the State’s Role in the Economy (New York Times)
"In a speech to party cadres containing some of the boldest pro-market rhetoric they have heard in more than a decade, the country’s new prime minister, Li Keqiang, said this month that the central government would reduce the state’s role in economic matters in the hope of unleashing the creative energies of a nation with the world’s second-largest economy after that of the United States."
"The broad proposals include expanding a tax on natural resources, taking gradual steps to allow market forces to determine bank interest rates and developing policies to “promote the effective entry of private capital into finance, energy, railways, telecommunications and other spheres,” according to a directive issued on the government’s Web site."
"China’s leaders are also promising to loosen foreign exchange controls, changes that are likely to reduce price distortions in the economy and allow the market to determine the value of the Chinese currency, the renminbi. On Friday, the central bank, the People’s Bank of China, issued a statement that repeated such vows."