Key facts
- China's industrial activity is improving in the second quarter.
- Underlying weaknesses in the Chinese economy persist.
- China's current export-led expansion differs from previous periods.
- China is larger and produces more advanced goods than before.
- China's trade shows asymmetric growth with export increases but no import increases.
A Federal Reserve note indicates that China's industrial activity is improving in the second quarter, yet persistent underlying economic weaknesses remain. The analysis contrasts the current export-led expansion with the first 'China shock,' noting that China is now a larger global player, produces more sophisticated goods, and exhibits an increasingly asymmetric trade balance characterized by export growth without a parallel increase in imports.