China Economy


Chinese households hit the consumption brakes

Goldman reports that Chinese household consumption slowed in Q1, and will very likely slow further in Q2. Given OMICRON is likely to rebound, and property sales will come off again, China’s economy is facing growing headwinds: Sluggish consumption growth in Q1 and further weakening in Q2 According to the NBS household surveys, household consumption per


China bounces directly into new shock

China is bouncing out of COVID and into world of pain. Goldman: China’s Caixin manufacturing PMI rose to 51.7 in June from 48.1 in May on resumption of production as Covid cases dropped and restrictions eased. Among five major components, the output sub-index increased to 56.4 from 43.2, the largest single-month rebound since early 2020.


China’s COVID bounce takes shape, but…

OMICRON has been imprisoned in Xinjiang: Mobility is back Infrastructure is the stimulus tip of the spear: Energy is back: Property has rebounded but developer spreads are signalling no end to the trouble: The PMIs jumped. Pantheon: China’s June PMIs provided an encouraging sign of a strong recovery from the zero-Covid lockdown. The surge in


No flood stimulus in China

Pantheon with the note. — Chinese Profits Under Pressure, and Stimulus is Still Lacking Reopening in May provided a boost to Chinese industrial production, but industrial profits continued to fall. The pace of decline moderated, but we expect profits to remain under pressure for most of the year, amidst weak demand and probable further zero-Covid


The Chinese recovery is looking pretty good. So far…

One should never underestimate the power of CCP debt. OMICRON is contained: Mobility is lifting: Various economic measures are bouncing: Note that housing area sales are still affected by distortions around the timing of Dragonboat Festival. Even so, it’s a rebound of some sort. But how far it can get remains an issue of counterparty


Another Chinese trade canary dies

Pantheon with Korean exports. — Korean 20-day exports slumped in June, falling 3.4% year-over-year, after growing 24.1% in May. Sharp swings at this time of year are not unheard of; the 20-day numbers are quite volatile anyway, and the loss of two working days at the start of the month explains much of the weakness.


Chinese property regresses to bartering

This is how bad it is for Chinese property developers now: As China’s property slump persists, one developer is trying to entice farmers to buy homes by accepting their crops as payment. Central China Real Estate Ltd. is offering to pay farmers as much as 160,000 yuan ($24,000) for their wheat to offset down payments


China’s external shock builds

Goldman wakes in fright. Given the enormous pile of inventories in DMs now, I do wonder if the trade shock will not be sharper than these other recessions. China’s May activity data showed clear improvements from the April trough and surprised market expectations to the upside. Auto sales, online goods sales, property sales and housing


A green shoot in Chinese property!

The Chinese unrecovery is showing more green shoots. COVID is contined for now: Mobility is improving: Broder macro indicators are lifting: Even property sales are showing signs of life though I’m not sure whether the timing of holidays is distorting the growth rates. Developers remain cooked: It’s certainly the case that policy doing its best:


Chinese property bust rolls on

The Chinese 70-city house price data was out late yesterday and showed a little sign of improvement. Prices fell 0.2% on the month, the same as April, and were flat over the year: The breadth of price falls is unchanged: Top tiers are stabilising: But that does not really matter for construction. 80% of that


Chinese unrecovery arrives

Goldman has the main points. The reality is very likely to be worse than this data suggests.  — Industrial production (IP) rose by 0.7% yoy in May (vs. a 2.9% yoy contraction in April), beating market expectations. On a sequential basis after seasonal adjustments, it rebounded to +3.4% mom non-annualized in May from -8.4% in


China unrecovery to end in another shock

The new Chinese unboom is here. TSLombard: Omicron remains the single most-important China macro variable. We think healthcare and political constraints mean the zero Covid policy is here to stay for at least the next six to nine months. Beijing is pushing on the stimulus accelerator, but the Covid brake on activity will remain and


Chinese credit unrecovers

The Chinese unrecovery is going swimmingly. Credit unrecovered late last week. Pantheon: Credit is flowing, but where is it going? Chinese M2 growth rose to 11.1% y/y in May, from 10.5% in April.  Consensus was 10.3%. Chinese M1 growth slowed to 4.6% y/y in May, from 5.1% in April.  Consensus was 4.9%. Chinese M0 growth


COVID dogs Chinese unrecovery

Via FTAlphaville Ajay Rajadhyaksha is global chair of research at Barclays. Having seemingly successfully beaten back Covid — cases were below 100 last week, in a country of 1.4bn — China announced that it was open for business again. Can it last? Already, the signs are ominous. Shanghai officials this week increased testing capacity and


China reopens, property stays shut

The Chinese unrecovery is progressing well. COVID is still popping up regularly: Mobility is slowly lifting: Property and trade remain shut: Property especially is showing no change: Sunac China, the country’s third largest property developer by sales, is seeking to extend repayment of an onshore bond due June 13 by two years, first reported by


Chinese capital outflow to continue

Pantheon right again.  — The latest Chinese FX reserves data for May suggest an improving backdrop for the currency, rising to $3,128B, from $3,120B in April. This brings to an end the longest streak of declines in reserves since 2016. But the data flatter to deceive. The gain in reserves came during a period of


Chinese unrecovery takes shape

Pantheon with the note. — The Metric Chinese Policymakers Care About Most is Yet to Recover China’s PMIs staged a rebound in May, with both official and Caixin surveys bouncing back from April’s zero-Covid induced weakness. But economic activity remains in dire straits, as we noted here, with sub-50 prints implying that growth slowed month-on-month


A new China shock emerges

Pantheon reckons Chinese deflation will continue: China will Export Disinflation, not Inflation, despite New Stimulus The last thing the world needs right now is another source of inflation, so China’s stimulus announcement last Tuesday was met with consternation in some quarters. But we think China will be a source of lower, not higher, inflation this


Estimating the Chinese recovery

The COVID battle rages on towards its Pyrrhic victory: The economy still appears stalled:   But the debt is flowing for infrastructure: Goldman: Recent days have seen headlines with more stimulus measures to stabilize growth, including more tax cuts/rebates, policy bank support, railway construction bondissuance, and frontloaded 2023 budget for transfer payments. Taking stock of


The end of Chinese growth

Logan Wright at Rhodium. Yep. Middle-income trap dead ahead. — China’s economy is clearly contracting sharply under the weight of “zero COVID” policies, even though Q1 GDP growth beat expectations and April data showed only a modest decline in industrial output. Consensus expectations have not fully factored in the degree to which China’s economy is


China springs its debt trap on EMs

They were warned repeatedly. Jay Newman was a senior portfolio manager at Elliott Management, and is the author of Undermoney, a thriller about the illicit money that courses through the global economy writes at FTAlphaville.  === Investors in emerging market sovereign debt are junkies — addicted to the illusion of higher yields. Truth be told,


Chinese economy turns Japanese

Chinese data ended May poorly. Pantheon: China: The official manufacturing PMI rose to 49.6 in May, from 47.4 in April.  Consensus was 49.0. China: The official non-manufacturing PMI rose to 47.8 in May, from 41.9 in April.  Consensus was 45.5. Still shrinking, just more slowly China’s PMIs were never going to be as bad in


Welcome to the Chinese unrecovery

China is reopening Shanghai and lifting some other lockdowns: Shanghai will let residents in low-risk areas leave and enter their compounds as the financial hub takes its biggest steps toward lifting a two-month strict lockdown. The city will resume taxi and ride hailing services while allowing cars onto the road in low-risk areas, the municipal


Chinese property market wreckage broadens

China’s unwinnable zero-COVID battle rolls on: At obvious economic cost: The property sector remains face down in the dirt: With defaults now spreading to SOE developers: The Shanghai Stock Exchange is making efforts to facilitate the financing of Chinese property developers by spearheading a call between five homebuilders and investors, after Greenland Holdings became the