• A disclaimer first. China remains an enigma to us. While we have a pretty good view on US and Eurozone monetary and fiscal policies and the business cycle, we cannot say the same thing for the Chinese equivalents. Having said that, there’s no way around the fact that China, the world’s second biggest economy, leads the global business cycle. The chart below shows the OECD’s leading indicators, which are defined as where output is relative to its long term potential level. Reading above 100 suggest above potential/trend growth, while readings below 100 reflect the exact opposite:


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