China Economy

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Beijing threatens protesting Olympians with “certain punishment”

The Beijing Olympic Committee (BOC) has warned that protests by athletes at the upcoming Winter Olympics that breach China’s restrictions on freedom of speech would be liable under Chinese law. Yang Shu from the BOC contends that the politicisation of sports is contrary to the Olympics Charter, while any behaviour that is against the “Olympic

1

China triggers property bear market party

The bear market property party is underway in China on its new, that is old, ponzi fix for developers to spend their client’s deposits on sustaining the unsustainable: Citigroup The potential easing will likely be executed at the local level on a case-by-case basis without a formal announcement, according to analysts including Griffin Chan The

2

China robs Peter to pay Paul in new property unfix

Another attempted property fix is on the drawing board: Chinese regulators are considering lifting some restrictions on developers’ access to cash from presold properties tied up in escrow accounts, according to people with knowledge of the matter, a potentially major step toward easing the industry’s liquidity crunch. Regulators including the housing ministry and the banking

1

China stimmies flow!

Did you say MOAR? Goldman on the PBoC: PBOC held a press conference this afternoon on the MLF and OMO policy rate cut on Monday (January 17). In general the tone from PBOC is very dovish and pro-growth. PBOC stated the need to expand the monetary policy toolkit, hinted at an LPR (Loan Prime Rate)

9

Chinese property hurtles towards ‘Lehman moment’

According to a useless AFR: I assume the subbies are joking. Yesterday’s stimulus was minor and, in context, dangerously so for those dependent upon Chinese property demand. The Chinese property market has a much larger problem than yesterday’s stimulus suggests. The liquidity crisis engulfing property developers is accelerating as it sucks in the good as

4

China cuts rates as property market crash lands

Chinese data for December is out and is a mess. The headline numbers were fine owing to resumptions in output after recent energy-related shutdowns. Q4 GDP was a respectable 1.6% to deliver a lousy 4% over the year: Growth internals were mixed for the month of December. Industrial production was decent year on year at

5

China’s endgame is to kill its property market

What is China’s endgame for its property shakeout? In short, the days of blistering home-price gains and debt-fueled building sprees by billionaire property tycoons are set to fade. They’ll be replaced by a much more staid market where authorities are quick to clamp down on speculative frenzies and development is dominated by state-run companies earning

1

What will OMICRON do to China?

Deutsche with the note: Omicron detected in Tianjin and Henan China’s first Omicron outbreak was detected in the city of Tianjin over the weekend. On the morning of Jan 8, two patients in Tianjin who actively sought medical treatment were confirmed as being infected with the Omicron variant. The local government immediately locked down certain

3

Chinese property hard landing deteriorates

As much as markets would like it to be over, it isn’t. It’s getting worse. Developer junk spreads exploded yesterday to new records: It took in all of the usual suspects: But, more alarmingly, it is dragging in the largest and most well-regarded developers in the country. Country Garden is the largest in the market

0

Chinese credit enjoys soggy bounce

Chinese credit was out overnight and enjoyed a soggy bounce with TSF up 2.37tr yuan and banks 1.13tr: The flow of loans was up 34% year on year: The stock of loans was up a little to 10.3% M2 climbed to 9%: Year to date Chinese credit was down 10% for 2021: Once again, the

0

Chinese growth sinks towards hard landing

What is a hard landing in China? Pick a number. Not long ago, 4% would have easily qualified. Goldman Sachs with the downgrade: The zero-Covid policy has been a pillar of China’s efforts to contain the coronavirus and keep domestic economic activity largely normal after the initial early-2020 national lockdown. We noted last week that

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China tries vainly to lift construction Hindenberg

China is still trying to fix property without really trying: China will accelerate investment in key projects and boost domestic consumption to help stabilize economic growth amid renewed downward pressures, according to a cabinet meeting chaired by Premier Li Keqiang, China Central Television reported. The State Council urged faster implementation of 102 key projects along

3

Chinese property still royally stuffed

A month later and little has changed. Chinese property is still royally stuffed. There has been a little easing for developer spreads: But sales remain awful: As are land sales, still down 70% year on year: More: Land sales measured in area in China’s 300 major cities reached 2.05 billion square meters in 2021 as

7

Beijing’s COVID zero-tolerance policy under Omicron assault

Goldman Sachs with the note: The number of Covid cases in China jumped in late December, with Shaanxi province the new epicenter. Although China has not yet reported any local infections linked to Omicron, markets have been increasingly concerned about the potential impact if the highly transmissible variant enters China and leads to further restrictions.

9

Evergrande crisis deepens

A great way to start the new year – a potential Chinese housing crash that could spillover to Australia? Evergrande has been put into a trading halt in Hong Kong yesterday – more from ABC: Troubled Chinese property giant Evergrande’s shares have been suspended from trading on the Hong Kong stock exchange. The company did

0

PBOC ramps up easing rhetoric heading into 2022

Goldman Sachs with the note: Bottom line: The PBOC held its Q4 monetary policy committee meeting on December 24th, with the meeting statement released on the evening of 25th December. The PBOC’s Q4 MPC meeting echoed Beijing’s stance at the recent Central Economic Working Conference (CEWC) – it emphasized policymakers would step up support to

0

Nomura: Worst not over for Chinese property

Nomura with the note (Tu Ling has been better than most on this): Despite Beijing’s efforts to alleviate the funding crunch for developers, we expect developers and their construction partners to face some increasing financial challenges in the next couple of months. First, they may need to pay a total of RMB1.1trn in deferred wages

0

Why China will continue to ease monetary policy

TS Lombard with the note: The end of coal shortages and the property slump mean that PPI is topping out, while Covid zero tolerance is capping CPI gains. Covid capex could create excess supply and export price disinflation. Benign domestic inflation backdrop allows the PBoC to continue easing; a 50bps RRR reduction and targeted rate

1

The next China upswing will miss iron ore

Welcome to the new post-iron ore Chinese stimulus pattern. There’ll be some stimulus around infrastructure and property, but it will be much smaller and less iron ore intensive than previously. Morgan Stanley with the note: Over the years, China has experienced a number of mini-cycles. This year brought another iteration – the economy started the

1

PBOC doves amid the Western hawks

The People’s Bank of China (PBOC) announced a surprise five basis points (bps) cut to the benchmark one-year Loan Prime Rate (LPR) to 3.80% this morning, while keeping the five-year rate intact around 4.65%:   This puts it into stark contrast with Western central banks with the Fed ready to unleash up to six rate

3

Goldman: Chinese economy needs more stimulus

Goldman Sachs with the note: Covid restrictions weighed on consumption and services in November: Local outbreaks have become more frequent in China in recent months. November data show clear evidence of Covid-related restrictions weighing on consumer activity. Consumer services and small businesses are most affected and remain 10%-15% below their pre-Covid trends. Labor markets have

2

China’s property correction rolls on

Goldman with the note: Bottom line: The National Bureau of Statistics’ 70-city housing price data suggests the average property price in the primary market edged down further from a month ago in November after seasonal adjustments. Housing prices in tier 1 and tier 2 cities rose at a slower pace while prices in lower tier

1

China data dump better than last month, but still bad

Housing Construction The glass one-third full interpretation of China stats out yesterday is that November wasn’t as dire as October. Which is true. New housing starts were up 14% from October to November. But they were still down 22% on last November. 20% vs 2019 or 2018. The trajectory is not good: Fixed Asset Investment

0

Westpac: the top is in for commodity prices

Westpac is out with an updated research note on commodities, contending that 2021 was the top for commodity prices, citing production costs now far outweighed by a “fundamental correction to high(er) prices”. There’s stormclouds on the horizon as the US Federal Reserve begins to taper its bond purchases and stamp on the interest rate hikes,

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Chinese property’s “glory days are firmly behind it”

Pantheon Macroeconomics with the note: Early Chinese data point to a stabilisation—at low levels— of economic activity. Infrastructure investment likely rose in November, partially offsetting the property slowdown. Prepare for a harsher crackdown on the private sector in 2022, and more infrastructure spending. Slow and Steady in November as Policymakers Double Down A November stabilisation

2

China’s new pattern of stimulus excludes iron ore

Welcome to the new post-iron ore Chinese stimulus pattern. There’ll be some stimulus for infrastructure but it is smaller than property and less steel-intensive plus the property adjustment will keep a lid on it via weak land sales. TSLombard with the note: Beijing is shifting gears, moving from marginal easing to broader stimulus measures. As

3

Chinese property bust deteriorates

As markets celebrate the bankruptcy of Evergrande as a reason to buy all the things, under the bonnet the Chinese property bust is getting worse, not better. Sales by floor area are as bad as at any time this year in the past week and the forthcoming holiday sales super-season is shaping as a writeoff:

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Evergrande goes bust. What next?

ZeroHedge has a great summary of where we are at as Evergrande goes bust: This is the way Evergrande ends: not with a bang but a whimper. Three months after an initial shockwave of fear that China’s largest and most indebted property developer was set to default, roiled global markets only to see the company