By Trefor Moss
The lights are flickering in the world’s economic powerhouse.
Although China’s outlook may still be positive by, say, European standards, the numbers show that the country’s storied growth engine has slipped out of gear.
Businesses are taking fewer loans.
Manufacturing output has tanked.
Interest rates have unexpectedly been cut.
Imports are flat.
GDP growth projections are down, with some arguing that China might already be in recession.
In March, Premier Wen Jiabao put the 2012 growth target at 7.5 percent; then seen as conservative, it’s now viewed as prescient.
If realized, it would be China’s lowest annual growth rate since 1990, when the country faced international isolation after the 1989 Tiananmen Square massacre.
What are the concrete indications that China is experiencing something more than just a spreadsheet slowdown?
Here are five real-world signs of China’s economic malaise.
1. BYE-BYE BMW
The $586 billion stimulus package that enabled China to sail through the 2009 global downturn only deferred the pain for local governments.
Now they’re being asked to repay their debts, and that means some serious belt-tightening at City Hall.
The fleets of flashy cars that local officials indulgently amassed during the boom years will be among the first things to go.
The city of Wenzhou is planning to auction off 80 percent of its vehicles this year — that’s 1,300 cars — with similar fire sales occurring nationwide.
Even Ferrari is sounding nervous about the Chinese downturn, and not only because Bo Guagua is seemingly off its list of potential customers.
Part of the headache for municipal governments is that land sales have dried up thanks to a central government initiative to cool China’s overheating property market, as well as a shortage of cash and confidence among potential buyers.
In June, the average housing price for 100 major Chinese cities rose for the first time in nine months, but prices are still down 1.9 percent from last year.
Some government premises could be next on the block, once those official cars have been driven away by their new, private owners.
Then the extreme economizing begins: China’s elaborate official banquets could become a lot more prosaic.