China Economy

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Where will the next Chinese bubble be?

Cross posted from Investing in Chinese Stocks. With the January surge in liquidity looming in the distance, the Chinese real estate market is hitting an important turning point. iFeng: 2019年楼市或加速分化 楼市成交整体走低 According to the statistics of the Krui Real Estate Research Center, during the Spring Festival, the data of more than 40 key monitoring cities showed that

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Minsky’s nightmare: China’s 65m empty apartment problem

Via Nikkei: A massive building boom across China, including in tier-two cities like Jinan, has left as many as 65 million empty apartments across the country, according to estimates by Gan Li, a professor at Southwestern University of Finance and Economics in Chengdu. Sales volumes in 24 cities tracked by China Real Estate Index System fell

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Chinese trade booms!

Via Capital Economics: Shipments beat expectations but seasonal distortions muddy the water • The January trade data were much stronger than anticipated but seasonal volatility caused by annual shifts in the timing of Chinese New Year make it difficult to get a good grip on underlying trends at this time of year. Even if the

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Why China will ‘grow old’ before it ‘gets rich’

By Leith van Onselen I have noted previously how China’s economy is facing stiff headwinds from an ageing population (see here, here, here, and here). Essentially, China’s ageing problem stems from its ‘one child policy’, which was brought into effect in the early-1970s and is credited with preventing around 400 million births from 1979 to

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Chinese capital outflow eases

Via Capital Economics: • The People’s Bank (PBOC) appears to have intervened little in FX markets last month, suggesting that the renminbi is not facing much downward pressure at present. However, with the economy likely to slow and interest rates likely to fall further over coming months, pressure is likely to return later this year.

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Desperado China orders another stocks bubble

Didn’t there used to some urban myth about the marvelous Chinese technocrat? Via Bloomie: Days after replacing an overly cautious securities regulator, Beijing has mounted a multi-pronged effort to revive the market’s buzz: It set out the framework for a new tech-stocks exchange, cleared the way for more margin loans, made it easier for securities

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China has not yet dodged a 2019 hard landing

Via Zero Hedge reporting on Credit Suisse: With the latest China economic data once again underwhelming overnight, it is safe to say that in a world where consensus overwhelmingly expect a global recession to arrive some time in 2020, China – which continues its aggressive shadow deleveraging campaign – remains the biggest potential catalyst for

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China readying rate cuts?

Hello Shanghai Accord! With the Fed in neutral, Barclays says China is next to cut, via Bloomie: “Existing measures are not sufficient to lower the financing costs of the real economy, in a down-cycle with rising credit risk and falling producer-price inflation,” the analysts led by Jian Chang wrote in a note. “Hence, lowering the

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China Caixin PMI down down

Via Caixin: Latest survey data signalled subdued overall operating conditions in the Chinese manufacturing sector at the start of 2019. Production and total new work were both slightly down at the start of the year, despite a renewed increase in export orders. Relatively muted demand conditions underpinned the first fall in purchasing activity for 20

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Chinese steel demand booming or breaking?

Yesterday we saw a strong rebound in the China steel PMI via MySteel: China’s Purchasing Managers’ Index (PMI) for the steel industry returned to the expansion zone, scoring 51.5 after a strong month-on-month growth of 5.9 basis points or a recovery for the second month after struggling in the contraction range over November-December 2018, amid

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Yuan fix goes long and strong into US trade talks

by Chris Becker Big moves by the PBOC today after the release of the Chinese PMIs which remained in contraction. The official fix was strengthened to 6.7025 from 6.7343 with offshore Yuan trading catching up quicksmart: This has been part of a greater move, orchestrated since the beginnings of the US/China trade talks to give

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China PMI remains in contraction

China’s January PMI is out and remains in contraction: In January 2019 , the China Manufacturing Purchasing Managers Index ( PMI ) was 49.5% , up 0.1 percentage points from the previous month . In terms of enterprise scale, the PMI of large enterprises was 51.3% , up 1.2 percentage points from the previous month and continued to be above the critical point; the PMI of small and medium-sized enterprises was 47.2% and 47.3% , respectively, down 1.2 and 1.3 percentage points from the previous month . Below the critical

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Capital Economics: Chinese GDP slows

by Chris Becker From Capital Economics on today’s GDP print from China: GDP growth edged down from 6.5% y/y in Q3 to 6.4% last quarter, in line with both the Bloomberg median and our forecast. GDP growth for 2018 as a whole was 6.6%, down from 6.8% in 2017. The official GDP figures have been

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With productivity decelerating, China’s economic miracle is over

CBA Senior Currency Strategist, Joseph Capurso, has produced a new research report arguing that “China’s economic miracle is over” owing to slowing productivity growth and demographic headwinds. This will drag China’s growth down “from around 6% currently to around 4% by 2030”: According to Capurso, despite the slower growth, China may still escape the so-called

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Chinese credit still weak

Global markets are convinced that China is about spring from its credit funk but so far it ain’t. December credit was decent at 1.59tr yuan with 1.08tr in bank loans but hardly tearing it up: Shadow banking had a better month: The three month moving average for new credit flopped into the positive: There is

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Capital Economics: China slowing internally

by Chris Becker Capital Economics are out with two important reports on the latest trade figures and state of the economy in China. Yesterday’s trade numbers for December shocked to the downside, and Capital’s view aligns with Houses and Holes that any slowdown in the Middle Kingdom’s economy is part of its structural re-alignment and

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China to cut growth target

Via Reuters: China plans to set a lower economic growth target of 6-6.5 percent in 2019 compared with last year’s target of “around” 6.5 percent, policy sources told Reuters, as Beijing gears up to cope with higher U.S. tariffs and weakening domestic demand. The proposed target, to be unveiled at the annual parliamentary session in

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Chinese inflation tanks

Chinese inflation for December is out and it’s adieu price pressures as growth fades: In December 2018 , the national consumer price rose by 1.9% year-on-year . Among them, the city rose 1.9% , the rural rose 1.9% ; the food price rose 2.5% , the non-food price rose 1.7% ; the consumer price rose 1.7% , and the service price rose 2.1% . In December , the national consumer price ratio was unchanged from

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Is China readying “kitchen sink” stimulus?

Zero Hedge has some hints today: Over the weekend, when commenting on the latest rather disappointing RRR cut out of China (which would release just enough liquidity to offset liquidity drains via the MLP and repo) we pointed out another, far more important event which took place in late December, when traders were generally away on vacation,

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Gold rising as China lifts its reserves

by Chris Becker What’s going on with gold? While there has been some recent weakness in the US Dollar Index, 2018 was the year for USD against almost all the major currencies as the US Federal Reserve continued to lift interest rates in an attempt at normalisation. Still, the price of gold in USD rose

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China to build more railways to nowhere

Via the AFR: A flurry of construction may be about to take off in China, and investors have pinned their hopes on it. Stocks of Japanese machinery makers Komatsu and Hitachi Construction Machinery perked up on Monday. Over the past week, Chinese engineering and construction companies’ shares have surfaced from multi-month lows. …The optimism stems

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China’s remarkable non-rebalancing

A picture is worth a thousand words: Remarkable graphic showing that even though China rebalancing has made some progress, it is light years away and structurally a country mile from its developed and emerging peers. 1/n pic.twitter.com/rJQ4H4wbOS — George Magnus (@georgemagnus1) 6 January 2019

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Chinese capital outflow pressures remain

Via Capital Economics: The People’s Bank continues to intervene, but on a small scale • The People’s Bank (PBOC) appears to have sold only a small amount of foreign exchange last month, suggesting that the renminbi has faced little downward pressure recently. • The value of the PBOC’s reserves amounted to $3,073bn at the end

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It’s all about Apple as it blames China

by Chris Becker Looks like we’re reliving the GFC all over again with interconnectedness so high that global currency and stock markets are going to crash because some single Chinese youths are not buying as many iPhones as they should. Apple announced a near 10% reduction in its forward guidance, releasing this report: While we