The stimulus from China's monetary policy is having increasingly less of an impact on the real economy on account of high corporate and private debt. The figures recently-published industrial production figures have shown once again that the economy is losing substantial momentum, not least as the property boom comes to an end3.



While year-on-year growth of industrial production was much stronger than in most other countries in June, at 6.8%, it is much lower than the double-digit figures recorded virtually across the board only two years ago.



Also, the sharp fall in imports in the early months of this year, due only in part to lower commodity prices and the stronger renminbi, suggests an even weaker economic trend.



While the financial wealth of private households should be higher than at the beginning of the year, there are still winners and losers resulting from equity price moves, where the equity collapse probably hit consumption harder than it was lifted by the rise.



Many investors have increasingly their debt in order to take speculative equity positions in recent months and some are probably sitting on a large pile of debt at the moment, says Commerzbank.