China Economy

6

PBOC looks set to stabilise Chinese stocks

After the near 4% drop in A-shares yesterday on the Shanghai Composite, precipitated by another round of punitive tariffs by the Trump administration, it was inevitable that Chinese authorities would step in somehow. An event like this on US markets would usually involved the rolling out of Fed officials to placate fears, but without any official intervention,

4

China slows sharply as steel boom goes nuclear

China released its May data dump today and growth is slowing sharply. All measures missed expectations with industrial production at 6.8%, fixed asset investment at all time lows of 6.1% and retail sales likewise weak at 8.5%: But under the bonnet, the crucial real estate/steel complex is absolutely booming. Floor area sales rebounded to be

0

Chinese trade holds up

Via Capital Economics: • Import growth was surprisingly strong last month. This probably reflects a continued recovery in industrial activity following the easing of winter pollution controls and is unlikely to be sustained. Meanwhile, with global growth now past its peak, Chinese export growth is trending down. But progress in US-China trade negotiations raises hopes

1

China capital account still stable

Via Capital Economics: Capital outflows remain muted despite broader EM selloff • The latest foreign exchange reserves data are consistent with very little PBOC action in the FX markets. This suggests that the recent resilience of the renminbi relative to other EM currencies reflects confidence in China’s economy and ability to manage its exchange rate

4

China offers US $200bn trade remedy

Via Reuters: China has offered U.S. President Donald Trump a package of proposed purchases of U.S. goods and other measures aimed at reducing the U.S. trade deficit with China by some $200 billion a year, U.S. officials familiar with the offer said. The offer was made during U.S.-China trade talks in Washington aimed at resolving

0

China’s second half slowdown locked in

Some nice material today from Vertical Group on the Chinese slowdown. QUICK TAKE: In short, our thesis is that city-level and regional macroprudential tightening policies in China currently will render economic growth in 2Q18, but more importantly 2H18, dismal; we believe this will spread to emerging markets, rendering the “global coordinated growth” bulls out of sync

3

Chinese property prices slow slowly

Chinese house prices for April were out late yesterday and continue to slow slowly.  Month on month growth edged up to 0.4% and year on year fell to 4.7%: Here’s the raw data: Tier one cities are still falling, tier two holding up best and lower tiers fading as well: The composition of price moves

3

Chinese growth slows steadily (except steel!)

China’s April data is out and showed growth internals trending down. Industrial production jumped back to 7% but fixed asset investment hit its lowest level for as long as anyone can remember at 7%. Retail sales also dipped to 9.4%: Under the hood, real estate floor area sales continue to slow, up just 1.3% year

3

Deflation returns to China

Chinese CPI and PPI are out for April at 1.8% and 3.4% respectively. The CPI is weak: Across the board: The PPI bounced year on year but the monthly numbers tell us what’s coming: deflation… Again broad outside of oil: Chinese deflation is back as growth begins to slow.

3

Morgan Stanley: China is not going to slow this time

Via Morgan Stanley: The incredibly tight link between the credit impulse and China’s growth cycle, emerging markets (EMs) exports, global growth and commodity prices meant that it would have accurately predicted the direction of almost all other global macro variables that mattered, with about six months’ lead time. China’s credit impulse – or its leverage cycle

2

China Caixin PMI holds up

Via Markit: April survey data pointed to a further marginal improvement in operating conditions across China’s manufacturing sector. Although output rose at a slightly quicker rate, new order growth slowed amid a renewed fall in new export work. Consequently, purchasing activity rose only modestly, while firms noted higher inventories of both inputs and finished items.

36

Chinese factories roll out brain scanners

More on your new best friend and hegemon today, from the SCMP: On the surface, the production lines at Hangzhou Zhongheng Electric look like any other. Workers outfitted in uniforms staff lines producing sophisticated equipment for telecommunication and other industrial sectors. But there’s one big difference – the workers wear caps to monitor their brainwaves,

0

China PMI slows again

The April China PMI is out and slowed after the post-pollution cuts rebound: In terms of the size of the company, the PMI of large-sized companies was 52.0% , which was 0.4 percentage points lower than last month and remained in the expansion range; the PMI of small and medium-sized enterprises was 50.7% and 50.3% , respectively, up 0.3 and 0.2 percentage points from the previous month , and it was continuously The boom period. From the classification index,

4

China moves to stimulus war-footing

This via a couple of uncertain sources. Monday’s Politburo meeting highlights: Measure to continue expanding domestic demand – in the face of threats over trade, renewed focus on boosting consumption: tax cuts, lower bank reserve ratios. Renewal of  tax exemptions for purchases of home appliances and automobiles look to be in the pipeline also. Further derestricting

0

Chinese yields herald falling earnings, commodities

From Bloomberg: Yields on 10-year Chinese government bonds have been a strong indicator of earnings-per-share for emerging-market companies over the last five years, and the recent decline suggests a deteriorating outlook, Morgan Stanley strategists including Graham Secker and Jonathan Garner wrote in a note to clients Friday. “What makes the move more disconcerting is that there has

6

China eases capital controls for the few

Via the AFR: China is relaxing limits on outbound investments by wealthy individuals and institutions for the first time in two years…Qualified Domestic Individual Investor, or QDII schemes, were launched in China more than a decade ago to enable asset managers to raise funds from individuals and institutions to invest offshore for the first time.

1

China house prices rebound a little

From China’s NBS today comes March 70 city house prices up 0.4% month on month and 4.9% year on year: Raw data: 28 cities were flat or falling with 42 rising: Third and second tier have re-accelerated a little: This is more or less as expected. As said many times, authorities have cooled the market

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