Stresses bubble near surface in China

<p>Kia ora,</p><p>Welcome to Thursday’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 tensions are spilling out in China over their struggling property development and shadow banking industries.</p><p>But first, US <a href="https://www.mba.org/news-and-research/newsroom/news/2023/08/16/mortgage-applications-decrease-in-latest-mba-weekly-survey" target="_blank"><strong>mortgage applications slipped yet again</strong></a> last week, the fourth week in a row it has done that. And that was undoubtedly because mortgage interest rates rose yet again with their benchmark 30 year rate now at 7.16% plus points and back to matching its October 2022 highs. Prior to that, you have to go back more than 20 years to find a higher level.</p><p>US <a href="https://www.census.gov/construction/nrc/pdf/newresconst.pdf" target="_blank"><strong>housing starts</strong></a> bounced back in July from their disappointing June levels with a better result than anticipated, rising to an annualised rate of 1,452,000 and almost +6% above the level of a year ago. <a href="https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/housing-data/data-tables/housing-market-data/monthly-housing-starts-construction-data-tables#:~:text=The%20trend%20in%20housing%20starts,for%20all%20areas%20in%20Canada." target="_blank"><strong>Canadian housing starts</strong></a> came in at a good level too in July, better than expected, but not quite up to the June level.</p><p>American <a href="https://www.federalreserve.gov/releases/g17/current/default.htm" target="_blank"><strong>industrial production</strong></a> rose unexpectedly in July from June but it is virtually unchanged from a year ago. But other than construction, it would have been a healthy gain.</p><p>The Fed FOMC July meeting minutes were <a href="https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20230726.p