Over the weekend we saw two new data points in China. The first was Industrial Profits for July which rose 11.1% year to date but have eased to their lowest print this year, down from 12.3% in June and 17.2% in January.
Also out was the July MNI Business Sentiment Survey which registered a strong fall of 2.4 points to 51.3, the lowest this year by some distance and the lowest I can recall. Offering some promise, its new orders measure rose a touch and remains strongly positive at 54.7 points.
Finally, for those with concerns about tightening credit, there was this, also from MNI:
China’s National Audit Office may begin a thorough audit of local government debt as early as this week amid growing concerns about the systemic risk posed by years of untrammelled borrowing.
The audit office said in a short statement Sunday that the State Council has ordered the accounting, highlighting the new government’s determination to get to grips with a debt pile that some fear is already weighing on China’s growth potential.
Although the statement didn’t provide any details about the audit, the People’s Daily reported Sunday that it will start from August 1 and aims to provide a thorough accounting of debt at central, provincial, city, county and township levels of government.
These kinds of excersises have been pretty cynical in the West since the GFC so I’m not sure how much credence we can give the Chinese audit process. Taken at face value, at least, it does appear to be more evidence of an intention to keep the boot on credit.
Which is perhaps why 7 day repo is suddenly looking restive again. From CNBC:
