The View | Quantitative Easing with Chinese Characteristics

It comes to something when the news that Chinese house prices have fallen 6.1 per cent in the last year is greeted with optimism - because they hadn’t gone down for four weeks.

The fortune of the formerly one-way property market is closely related to the feel-good factor in China, at a time when indebted property companies, forests of see-through tower blocks by day, and dark estates by night, are obvious signs of distress.

A seemingly never ending run of bad data reveals the parlous state of the Chinese economy. Some independent economists estimate current overall economic growth to be closer to 2 per cent, rather than this year's target of 7 per cent.

Just this week it was announced that April exports were down 6.2 per cent in a year, and capital outflows were the highest ever, as funds leave the maturing economy for global investment.

The service sector is showing milky growth and the April HSBC purchasing manager’s index shows manufacturing shrinking to 48.9 (50 being neutral). This was the worst deterioration in 13 months and was joined by a further fall in manufacturing employment. We are in a hard landing.

Money supply is slowing, new loans issued by banks have again missed their targets, taxes were down 35 per cent in the first quarter, and government spending was up 33 per cent; a temporary blip, but reflective of the slowdown and the needs of infrastructure and welfare.