Car crash in China?

<p>Kia ora,</p><p>Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the international edition from Interest.co.nz.</p><p>And today we lead with news a coming car crash may be a literal one.</p><p>First up today in China, their <a href="http://en.caam.org.cn/Index/show/catid/64/id/2024.html" target="_blank"><strong>March car sales</strong></a> were strong. But they may have been at the expense of future sales because car makers are offering deep discounts to buyers. The fierce price cutting is endemic, and profits will be few. Some key suppliers are now <a href="https://www.caixinglobal.com/2023-04-07/in-depth-chinas-ev-battery-boom-goes-bust-102016688.html" target="_blank"><strong>reporting</strong></a> that orders have just suddenly dried up. The industry body is calling for an end to discounts, but with planned production expansion, that seems unlikely. It is a manufacturing sector that might wobble soon. After all, sales are now running -15% lower than their 2017 peak.</p><p>But we now have the private <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/bc47578ce5d143d588736b9768a3b727"><strong>Caixin services PMI</strong></a> for China and that has confirmed the earlier reported strong rise in the <a href="http://www.stats.gov.cn/sj/zxfb/202303/t20230331_1938271.html" target="_blank"><strong>official services PMI</strong></a> - showing a robust expansion there. It's the fastest pace of expansion in activity since November 2020, and comes with strong new services order intakes following the end of their pandemic restrictions. New orders rose at the fastest pace in 28 months, with new export business expanding at the quickest rate since the series began in September 2014. The contrast with the US is worth noting, but to be fair the US expansion has been going on for very much longer and without the volatility.</p><p>In the US, there were no surprises from the <a href="https://www.bls.gov/news.release/