China's GDP tumbled to 7.7% in 1Q13

6 straight months of decline.

According to DBS, the intended economic slowdown driven by the concurrence of the frugality campaign and the ongoing austerity measures imposed on the property market has worked exceedingly well. 

Real GDP has decelerated for six straight quarters to 7.7% in 1Q13. Yet the labor market has remained tight in general without wide spread reports of unemployment.

Here's more from DBS:

On the contrary, the difficulty of hiring remains exceedingly difficult. Inflation as measured by the CPI has correspondingly come down substantially to the 2% threshold.

On such counts, there should be nothing to worry about. The authorities have done a great job of managing a “soft landing” so to speak.

However, the monetary side of the economy tells another story. M2 advanced rapidly to 16.1% YoY in Apr 13 which is way ahead of the 13% target in spite of a slowing economy.

This could well be a reflection of the ballooning trade surplus at USD43bn as of end 1Q13 compared with only USD210mn in 1Q12 (many argue the trade surplus is inflated because of the malpractices of over-invoicing export to bring money in given ongoing appreciation of the CNY).

Whatever the case, the mirror image of rapid money supply is faster credit growth. New loans in the first four month of this year surged 12.7% YoY.

Under normal circumstances, rapid credit growth is usually suggestive of subsequent rebound in asset markets before pickup in real economic activities.

But the performance of the A-share market has been disappointing and the appetite for more property purchases amidst ever tighter administrative measures do not seem to suggest money is running towards such areas.