4 Charts That Give An Inside Look To China's Struggle

April's Flash PMI came in below expectations and the PBoC cut the reserve requirement ratio by 1 percent to 18.5 percent.

Barclays' Emerging Markets Research team said in a note Thursday "We think the weak March data, rising deflation risks, and liquidity pressure from the CNY1trn local government debt swap scheme amid reduced capital inflows were the main drivers behind the larger-than-expected move by the PBoC." The slowing economy has turned capital inflows negative and the CPI deflation and PPI disinflation are causing further strains on the economy.

The indicators only get more skewed as we continue.  Three month SHIBOR has bounced around in a 1.5 percent range all the while Shanghai A Index goes full "hockey stick"

SHIBOR (source: Morgan Stanley)

Shaghai A Index Hockey Stick (Source: Morgan Stanley)

Citigroup has created its Economic Surprise Index for China which tracks the relative performance of forecasts on Chinese economic data.  The index has been volatile through its uptrend since a bottoming in early 2014.  

Uncertainty about the future is clear and the only thing that can be known is that the PBoC will continue to lower its key rate and hope to moderate its property market and get a handle on prices.