Finally we have a piece of somewhat good news. Industrial production was up only 17.9% year on year in October, down substantially from September’s 18.9% year-on-year rise.Not only is this well below last month’s number, it is also well below expectations, which were for an 18.3-18.5% rise.
But we shouldn’t get too excited by the decline.September’s growth in industrial production was extremely high, and the October growth rate may be a partial rebalancing of that number. The October figure is more or less in line with August’s 17.5% and July’s 18.0%.
Also it seems to me that in past year we saw these numbers moderate around this time of year before bouncing back up again early in the next year. This may have something to do with the reduction in credit expansion we normally see in October, including this October.For the first ten months of the year total factory output was 18.5% higher than for the same period in 2006.
Michael Pettis is a professor at Peking University's Guanghua School of Management, where he specializes in Chinese financial markets. He has also taught, from 2002 to 2004, at Tsinghua University’s School of Economics and Management and, from 1992 to 2001, at Columbia University’s Graduate School of Business. He is a member of the board of directors of ABC-CA Fund Management Co., a Sino-French joint venture based in Shanghai.
Pettis has worked on Wall Street in trading, capital markets, and corporate finance since 1987, when he joined the Sovereign Debt trading team at Manufacturers Hanover (now JP Morgan). Most recently, from 1996 to 2001, Pettis worked at Bear Stearns, where he was Managing Director-Principal heading the Latin American Capital Markets and the Liability Management groups. He has also worked as a partner in a merchant banking boutique that specialized in securitizing Latin American assets and at Credit Suisse First Boston, where he headed the emerging markets trading team. Besides trading and capital markets, Pettis has been involved in sovereign advisory work, including for the Mexican government on the privatization of its banking system, the Republic of Macedonia on the restructuring of its international bank debt, and the South Korean Ministry of Finance on the restructuring of the country’s commercial bank debt.
Pettis is a member of the Institute of Latin American Studies Advisory Board at Columbia University as well as the Dean’s Advisory Board at the School of Public and International Affairs. He is the author of several books, including The Volatility Machine: Emerging Economies and the Threat of Financial Collapse (Oxford University Press, 2001). He received an MBA in Finance in 1984 and an MIA in Development Economics in 1981, both from Columbia University.
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October, 2007
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