Stresses bubble near surface in China

Kia ora,Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news tensions are spilling out in China over their struggling property development and shadow banking industries.But first, US mortgage applications slipped yet again 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.US housing starts 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. Canadian housing starts came in at a good level too in July, better than expected, but not quite up to the June level.American industrial production 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.The Fed FOMC July meeting minutes were released earlier today and they showed most voting members continued to see significant upside risks to American inflation, which could require further tightening of monetary policy. However, there were a couple that cited the risks to the economy of pushing rates up too far.China's new home prices fell in July from a year ago, and from a month ago they were unchanged. But in their largest 70 cities, prices for second hand homes are falling in 65 of them from the same month a year ago and at a faster pace. The pressure is on their residential housing market in a way that makes property development a losing proposition there.And investors in their retreating shadow bank funds industry are not happy again. We are getting reports a very small group have taken to the streets in protest at the situation, a 'brave' thing to do in China, but a sign of how desperate some of them feel. The police are out in force protecting the company at the center of the latest crisis. Beijing policy makers are reported to be pressuring funds not to sell into this troubled market. But it will be a tough conversation; when they tried this in earlier financial crises, it did not end well for the companies who held on to dodgy securities in situations like this.Analysts are making down China's GDP 'growth' for 2023 now. They will struggle to get anywhere near their "about 5.5%" target.In Europe, EU GDP rose +0.3% in Q2-2023 from the prior q