China’s mass human migration…cancelled


◼ Usually, it takes two to three weeks for China’s industrial production to recover to full capacity post a lunar new year (LNY) holiday as rural migrant workers return to the city. However, such a recovery is expected to arrive earlier this year as many workers spent the holiday in the city due to recent miniCOVID outbreaks in several different areas in China. During the fifteen days prior the LNY holiday, passenger traffic was down 76% compared to the same period in 2020 and 2019.

◼ Take iron production as an example. High frequency data shows that the dip in the share of operating blast furnaces was not as deep as in previous years, and the rebound started even before the holiday (Fig3). In this sense, we look for a relatively strong reading of 51.2 in the official manufacturing PMI due on 28 February, which is only marginally weaker than January’s 51.3.

◼In the meantime, despite cancelled trips, domestic consumer sentiment should also be supported as people spend money elsewhere. According to the Ministry of Commerce, sales of goods and food services during the holiday were up 28.7% from 2020 and 4.9% from 2019. In addition, China recorded its highest box office revenue during a LNY holiday, at RMB7.8b, up 32.5% from 2019. In this sense, we expect the non-manufacturing PMI in February to also remain supported amid solid domestic demand.

◼Chinese dollar bond spreads ripped tighter last week (IG-8bp; HY-49bp to UST), helped by constructive global data (including US retail sales, US IP and global flash PMIs) which in turn triggered a bear-steepening of UST yields (2yr-0.5bp,10yr +13bp;30yr +13bp).

◼Also helping secondary performance was a lack of primary issuance over LNY. There was just one new USD bond deal out of greater China last week…aUS$250m 10yr from China Ping An Insurance Overseas (Holdings) Ltd.

◼With Chinese issuers/investors now back from holiday, this week’s primary pipeline should be more active. In that regard, China Aoyuan Group has already announced a new 6NC4 deal.

◼With the next domestic data release not due until Sunday (China official PMIs), this week’s focus for regional credit investors will be top tier global data (incl.German GDP on Wednesday, US GDP on Thursday), corporate earnings (incl.HSBC on Tuesday) as well as speeches by UK PMJohnson, ECB PresidentLagarde & US Treasury Secretary Yellen (all Monday) and FOMC ChairmanPowell (Tuesday & Wednesday).

More China bullishness in the short term…

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)


    • Luca BiasonMEMBER

      The constant feedback from BRI projects gone/going belly up – be it in Europe, SE Asia or Africa – is quite consistent: no planning, no structure, no contingency plan, no standards. Just throwing huge amounts of cash on what are meant to be from day one massive infrastructural cluster****s, the only purpose to create a network of influence on a global scale (add money laundering and the lot as icing) and force signatories into coercive subservience and debt-slavery.

      • You forgot to mention gaining a strategic stronghold in the subject country courtesy of a Chinese workforce and accompanying administrative body which translates into permanent settlement.

    • Albania, Bosnia and Herzegovina, Croatia, the Czech Republic, Hungary, Macedonia, Montenegro, Poland, Serbia, Slovakia, and Greece sent their top tier mobsters. These were pivotal and they came.

      So called “No-shows” still sent their mobster representatives, one perch down from top, and are under political pressure from _______ (all are NATO entrants of 2004. – this should indicate the source of pressure).

      Every power exerts influence. Stockholm syndrome makes some forget that all the thumbs are the same, when from above.

  1. Canada’s parliament passed a non-binding motion 266-0 (cabinet abstaining) Monday saying China’s treatment of the Uighur Muslim minority in the Xinjiang region constitutes genocide, putting pressure on Liberal Prime Minister Justin Trudeau’s government to follow suit.

    But the Morrison government is too conflicted by r#pes in Parliament House Canberra to be concerned with the systematic r#pe of Uyghur women.

    • Luca BiasonMEMBER

      To be fair to the Australian government it is still difficult to legally define what is happening in Xinjiang as ‘genocide’, whereas it certainly meets all the criteria of ‘crime against humanity’ under Article 7 of the Rome Statute of the International Criminal Court.

    • Genocide should only be used for systematic killing in the hundreds of thousands and upward.

      What happened to the Armenians by the Turks more than a century ago is genocide. What happened to the Jews by Nazi Germany is genocide. What happened in Rwanda is genocide. However, by applying the term genocide to the ethnic cleansing in former Yugoslavia, it started the ‘slippery slope’ and every atrocity based on race or religion is given that term. Yazidis by ISIS, Rohingya in Myanmar, Uyghur in China, etc. In contrast, what the Saudi is doing in Yemen is not a genocide, even though over one hundred thousand have been killed already. Instead, it’s a ‘civil war’.

      The term genocide is only applied to countries the USA doesn’t like, rather than on merit and evidence.