China Economy

7

Um, hello, China selling Treasuries is a good thing

Some nice MSM panic today via Reuters: Whether China is reducing its vast holdings of U.S. Treasury bonds is a persistent question in global markets, and the recent escalation in trade tensions between the world’s two largest economies means the question is increasingly on investors’ minds. The U.S. Treasury’s latest report on international capital flows

0

China’s PMIs mixed

Chinese PMIs were out over Easter and showed good gains emerging from Winter shutdowns: In terms of the size of the company, the PMI of large-sized companies is 52.4% , which is 0.2 percentage point higher than that of the previous month and continues to be in the expansion range. The PMI for small and medium-sized enterprises is 50.4% and 50.1% , respectively, which is 1.4 % and 5.3 % higher than the previous month . Above the point. From

30

Forget the Chinese bid for Aussie property

Any Xie on Bloomie: I often find Mr Xie overly bearish but this is sound analysis. The key takeaway for Australia is that what lies ahead from mid-2018 in the first period in which Australia will confront capital outflow from its two major Chinese sectoral supports. The first is falling commodity prices and the second

1

China house prices still slowing

China was out with February house prices late yesterday. The numbers continue to soften with the month on month 70 city average down to 0.2% though year on year ticked up to 5.2%: Here is the raw data: Tier one city prices are turning negative while lowers tiers are still OK: 35 out of 70

0

Chinese growth still strong

China’s Jan/Feb data dump is out and beat across the board with industrial production at 7.2%, fixed asset investment 7.9% and retail sales at 9.7%: The usual early year distortion caveats apply. Under the bonnet, however, the all-important realty sector is still slowing with sales down to a new low at 4.1% year on year:

0

Chinese mortgage rates still rising

From Ifeng: iFeng: 房贷利率连升14个月!贷100万30年利息多出22万 In February 2018, the national mortgage interest rate continued to rise, rising for 14 consecutive months. According to 360 financial monitoring data, the average interest rate for the first home loan in the country in February was 5.46%, which was equivalent to 1.114 times the benchmark interest rate, which was a month-on-month increase

1

Chinese credit signals still more slowing

February new yuan loans were out over the weekend and the slowing trend is intact. Total social financing came in at 1.17tr yuan of which banks made up 834bn: The shadow bank share rebounded to 28%: M2 rose slightly to 8.8% And the rolling annual for new loans stabilised briefly: But as usual the devil

0

Chinese inflation signals further slowing

Chinese inflation is out and has several notable points. The CPI jumped to 2.9% on food spikes. But the PPI, which is a much better guide to industrial growth, continues to crash at 3.7%: A closer look shows the narrowness of the CPI spike: There’s no lasting problem there. But there is one in the

1

China to focus more on deleveraging

From Scope Ratings: China’s annual gathering of the National People’s Congress (NPC), which opened on Monday, reveals the nation’s policy direction in a number of rating-relevant areas. While meaningful economic and financial reforms are positive for the nearto medium-term outlook, Scope notes concern on the long-term implications of the continued centralisation of power. Amid heightening

1

China’s capital account stable

Via Capital Economics: PBOC remains on the side-lines, but trade war fears could trigger intervention  China’s foreign exchange reserve figures suggest that the People’s Bank remained a minor player in the FX market last month. But its pledge to allow a more market-driven exchange rate will be tested if the renminbi comes under renewed

2

Does Emperor Xi bake-in Chinese stagnation?

Via the AFR comes Ken Rogoff: “I think it [the centralisation of power] is a huge concern in terms of the long-term growth trajectory of China,” he told the Australian Financial Review Business Summit. “Maybe they will make it work, but I guess I’m sceptical they will make it work for very long.” Professor Rogoff

1

How to read different Chinese PMIs

Via Capital Economics: • The survey data don’t offer a clear signal on the strength of factory activity last month. The Caixin manufacturing PMI was largely unchanged but the official index dropped sharply. The former is generally the more reliable guide to cyclical trends. But we think it would be a mistake to ignore the

4

Caixin China PMI firm

Caixin China PMI: Business conditions continued to improve across China’s manufacturing sector in February. Although growth in production softened from that seen in January, total new work expanded at a slightly faster pace. Meanwhile, companies continued to shed staff as part of efforts to reduce costs, which contributed to a further rise in the level

0

More on China’s fading PMIs

Via Capital Economics: Weaker-than-expected PMIs highlight the downside risks to growth this year • A sharp decline in the official manufacturing PMI this month suggests that the survey data may finally be responding to the slowdown in growth shown on our China Activity Proxy late last year. And although a recovery looks possible in the

2

China PMIs hit the wall

It’s been coming for a while. China’s February PMI is out and weakened materially to 50.3. Internals were if anything weaker: According to the scale of the enterprises, the PMI for large enterprises was 52.2% , down 0.4 percentage points from the previous month and still in the expansion range. The PMI for medium and small-sized enterprises was 49.0% and 44.8% , down 1.1 and 3.7 percentage points from the previous month respectively . From the classification index, among the five sub-indices

23

Emperor Xi to take Japanese path

Via FT: China’s Communist party has cleared the way for President Xi Jinping to rule for life, and in the process strengthened the state’s “command and control” power over the world’s second-largest economy. Mr Xi’s unparalleled power theoretically allows him to push through painful reforms in the face of recalcitrant vested interests, particularly in state-dominated

0

Chinese house prices resume slowing

China released January house prices over the weekend and the slowing trend resumed after a few months of firming. Month on month was 0.3% and year on year 5%: All tiers slowed tier one turned negative year on year: 33 cities now have falling or flat prices: Here’s the raw data: And the iron ore

12

China property stress rises

Via Investing in Chinese stocks: The first warning signs were failed land auctions in Beijing at the end of 2017. Then signs of a collapse in shadow bank funding that. And now we know why at least one developer likened the credit market to the 1997 Asian Crisis: according to a report originally posted by 政商参阅,

4

Chinese credit decelerates faster

The Chinese slow down is locked and loaded and getting worse. Credit for January is out and the trends are unmistakable. Total Social Financing was down -18.4% year on year to 3.06tr yuan. Bank lending was a high proportion of that at 2.9tr: The shadow bank component tumbled to just 5.2%: The rolling annual for