China Economy

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China reaches end game for development

Via Investing in Chinese Stocks. We have finally reached the end of the cycle. You can be bullish, you can be bearish, but this is it. Chinese officials are out of ideas. Real estate investment is already slowing and the economy needs an offseting source of growth if GDP targets are to be met. Provincial

4

Why Morgan Stanley has turned bullish on China

From MS today: China’s shift from low income to middle income status has been the largest and most rapid economic transition in world economic history. Yet, throughout this journey doubts have been raised about its sustainability. Rising imbalances prior to 2007, a rapid buildup of debt after 2008, the currency regime shift in 2015 and

2

Chinese land sales tank

Cross-posted from Investing in Chinese Stocks. Although the term deleveraging has been thrown around for years in China, actual deleveraging has yet to take place: until now? iFeng: 专家谈房地产市场当前局势:在去杠杆通道中前行 Chen Sheng, executive director of China Real Estate Data Research Institute, told reporters that the transaction from the hot city fell sharply in January, the property

5

Chinese mortgages tighten fast

Cross-posted from Investing in Chinese Stocks. That was fast. A year ago China was in the middle of a roaring housing bubble, one that was starting to spread into second-tier cities. Credit growth was strong as well, but mortgage lending made up a large amount of credit growth, more than 100 percent in July. Fast

5

China cuts back its steel and coal cuts

Cross-posted from Investing in Chinese Stocks. Steel and coal were winners in 2016 and now China is easing back on planned production cuts. The subject of the Chines article below article is this Bloomberg Businessweek article written by Li Keqiang: China Premier Li Keqiang: ‘Economic Openness Serves Everyone Better’ In 2016, China shed more than

3

China attacks its housing bubble

Cross-posted from Investing in Chinese Stocks. The PBoC hiked before Spring Festival and followed with another hike on February 3. This has been dubbed a “precision strike” on the housing market because it wipes out the bank’s incentive to offer mortgage discount, pushing the interest rate on discounted mortgages below the market rate for similar

9

Chinese desert property during Spring festival

Via IFeng: Year of the chicken Chinese New Year, the national property market exceptionally deserted. During the Spring Festival holiday, the turnover of new homes in Shanghai was only 949 square meters, shrinking 70% from last year. Hefei, Xiamen, Nanjing and other cities rose last year, housing prices, trading volume for single digits, and a

1

Farewell Chinese stimulus

From Captial Economics:  The People’s Bank has raised the interest rate that it charges when providing funds in China’s repo market. This is the clearest evidence so far that monetary policy is being tightened and that supporting growth is no longer the primary immediate goal of China’s policymakers.  Effective today, the People’s Bank

6

How big is One Belt, One Road?

Fitch has a go at it today: China’s One Belt, One Road (OBOR) programme will support domestic demand in some of the economies involved, and may help to resolve some infrastructure inadequacies. However, OBOR is driven primarily by China’s efforts to extend its global influence and relieve domestic overcapacity. There is a risk that projects

38

Chimerica trade war good for Australia says RBA

As tensions heat up between President-elect Trump and the equally sensitive Chinese over trade policies that could lead to an all trade war, amid other problems arising from the “One-China” policy, the RBA is suggesting bring it on! In an interview to the WSJ, RBA board member Professor Ian Harper suggests any trade war would

12

Lazy thinking at the Economist

The Economist mounts a defense of Chinese capex today. They start with a study from last year: Western leaders often shake their heads in disbelief at the sums China spends on its huge projects. And some analysts question how much of it has been wisely spent. In a widely circulated study published last autumn, Atif

13

Rogue Yuan

The biggest shift in the post Xmas/NY market break has been the PBOC struggle to shore up the Yuan and to stop the speculative outflow of capital, which has seen alternative currencies like Bitcoin soar (and flop – down 30% today!) and gold re-inflate after the December Fed rate rise. Today saw the biggest move

40

Trump mulls 10% import tariff

CNN:  President-elect Donald Trump’s transition team is discussing a proposal to impose tariffs as high as 10% on imports, according to multiple sources. A senior Trump transition official said Thursday the team is mulling up to a 10% tariff aimed at spurring US manufacturing, which could be implemented via executive action or as part of

8

Chinese house price bubble begins to pop

With MYEFO out of the way, here comes the next problem: China slowing. November house prices are out and the slowdown we’ve been awaiting has arrived with prices up just 0.3% on the month and 12.6% on the year: The eastern bubble cities have hit a brick wall: The big fall in year on year prices

6

How far will the yuan fall?

The FT has a good take today on China’s ongoing USD problem: The dominance of bank lending and portfolio investment as a source of Chinese capital outflows casts doubt on whether Beijing’s recent clampdown on big-ticket foreign deals by the likes of Dalian Wanda and Anbang Insurance can shield the renminbi from downward pressure, intensified by