China Economy

16

Is Tianenman 2.0 inevitable?

From Jude Blanchette at the Center for Strategic and International Studies (CSIS) at the AFR: Some argue that Beijing will ultimately refrain from the use of violence due to a concern over its global reputation or domestic blowback. Kerry Brown of King’s College London predicted: “Anything too dramatic is going to be quite a high

1

Chinese credit sends out a major warning

Chinese credit data for July was out overnight and it was not pretty. Total social financing was a lousy 1.01tr yuan and banks were 1.06tr: New yuan loan growth is still up big year on year owing to last year’s deleveraging: But the shadow portion is falling away still: The rolling annual has stalled: M2

13

Ansell: “Brutal consequences” as manufacturing flees China

Via Domain: Ansell chief executive Magnus Nicolin has warned China of “brutal” consequences as manufacturers leave the country over rising costs and fears at the escalation in trade war with Donald Trump. “So many manufacturers are moving out of China at breakneck speed. You don’t see it in the China-reported GDP growth numbers yet. I

10

China’s Minsky moment intensifies

Via Zero Hedge: Step aside Baoshang Bank and Bank of Jinzhou, it’s time for Chinese bank bailout #3. Last month, when reporting on the imminent failure of yet another Chinese bank in the inglorious aftermath of Baoshang Bank’s late May state takeover, we dusted off a list of deeply troubled Chinese financial institutions that had delayed their 2018 annual reports…

44

Ray Dalio: Invest in China

Great video here from Ray Dalio on Cold War 2.0: His history is terrific but I disagree on the future: China’s investment-led economic model is running out of gas and will stagnate through the 2020s; The key driver is the failure of reform which leaves it wedged between falling productivity, rising debt and declining demographics; As

5

UBS: MOAR Chinese stimulus coming

Tell us something we don’t know! Via UBS after the US labelled China a “currency manipulator”: We think the latest US move will likely harden China’s position in trade negotiations. In our view, the latest US move, together with the unexpected US tariff hike on Chinese exports on August 1 could be seen as further

1

Beijing backs Hong Kong Lam duck

Via People’s Daily: Carrie Lam Cheng Yuet-ngor, Hong Kong’s chief executive, said on Monday that protesters’ sustained acts of disruption are pushing “our city, the city we all love and many helped to build, to the verge of a dangerous situation”. Lam, speaking at a news conference, pledged resolute action to maintain law and order

5

Is Hong Kong the next Tiananmen?

Bloomie offers some thoughts today: A soft approach toward protesters addressing demands for democracy could show dissidents on the mainland that widespread upheaval can bring about political change, something that may imperil the Communist Party’s grip on power. At the same time, sending in Chinese troops to restore order risks an international backlash that may

2

Caixin China services PMI sags

Via Caixin: The Caixin China Composite PMI™ data (which covers both manufacturing and services) indicated that business activity across China continued to expand at a marginal pace at the start of the third quarter. This was highlighted by the Composite Output Index posting 50.9 in July, up slightly from 50.6 in June. The uptick in

6

Australia’s economic dependence on China overblown

Today, Acting Director of the Australia-China Relations Institute (ACRI) – James Laurenceson – warned that Australia’s economic reliance on China is increasing from already extreme levels: The May export figures paint a stark picture of just how reliant Australia’s economy is on the Chinese boom. The money involved means if the Asian nation were ever to

0

Caixin China PMI still crap

No surprise there: PMI data indicated that operating conditions across China’s manufacturing sector were broadly stable at the start of the third quarter. Output was little-changed following a decline in June amid a slight increase in overall new orders. Subdued demand conditions nonetheless prompted firms to lower their workforce numbers again in July, and at

2

China PMIs wilt

It’s not going well in China. The July manufacturing PMI is still in contraction: In July 2019 , the China Manufacturing Purchasing Managers Index ( PMI ) was 49.7% , up 0.3 percentage points from the previous month , and the manufacturing boom level has rebounded. In terms of enterprise scale, the PMI of large enterprises was 50.7% , which was 0.8 percentage points higher than that of the previous month and rose to the expansion range.

8

China’s failing auto sector signals the great stagnation

Via the FT: China’s shrinking car market is hitting foreign manufacturing groups hard, with some companies operating at a fraction of their potential output, sparking fears a number will be forced to quit the world’s biggest market. Ford and Peugeot owner PSA have suffered the most, with their factories running well below full capacity at

0

Beijing warns Hong Kong

Via SCMP: Beijing made it clear to Hong Kong on Monday that a return to law and order should be “the most pressing priority”, and praised the city’s beleaguered police officers in an unprecedented show of support, despite heavy public criticism over allegations of excessive force used against anti-government protesters. The Hong Kong and Macau

12

China folds, bails out failing bank

Hoocoodanode? More great work from Zero Hedge: Step aside Baoshang Bank, it’s time for Chinese bank bailout #2. Last Thursday, when reporting on the imminent failure of yet another Chinese bank in the inglorious aftermath of Baoshang Bank’s late May state takeover, we dusted off a list of deeply troubled Chinese financial institutions that had delayed their

0

China’s industrial profits remain weak

From China’s NBS: National Bureau of Statistics 7 Yue 27 release of industrial enterprise financial data show that 2019 first half-year, profits of industrial enterprises above designated size decreased year on year by 2.4% , which, in the first quarter fell 3.3 percent , decline in the second quarter by 1.9% , showing a decline narrowed situation. The benefits of industrial enterprises in the first half of

16

Another Chinese banking domino falling

More great work from Zero Hedge today on the growing Chinese bank run: While the western world (and much of the eastern) has been preoccupied with predicting the consequences of Trump’s accelerating global trade/tech war and whether the Fed will launch QE before or after it sends rates back to zero, Beijing has quietly had

18

China’s “peaceful rise” is sure as Hell over

Back in 2005, my little magazine, The Diplomat, asked Peter Costello how Australia would reconcile China’s dictatorial government with our growing economic dependence. He replied it was not an issue because China’s liberalising economy would ultimately liberalise its political system.  I’m not sure if he believed it. It was convenient for everyone to believe at the

4

China’s little Minksy moment gets bigger

Terrific stuff today from Zero Hedge on China’s little Minsky moment: Ever since the unexpected failure of China’s Baoshang Bank in late May, which caused a freeze in the interbank market among smaller, less credible (and government backstopped) banks, and which sent rates on Negotiable Certificates of Deposit (NCDs), various bank bonds and assorted report rates sharply higher…

12

The building backlash against God King Xi

Via the excellent Richard McGregor at CNN: The backlash abroad against President Xi Jinping’s China, at least in developed nations, has spread rapidly in the last year. Some countries, like Australia and Canada, feel patronized and bullied. Neighbors worry they are being marginalized. Advanced industrial nations, especially Germany and South Korea, see China coming at

2

Chinese capital outflows accelerate

Via Goldman: …as Goldman points out, amid the lingering trade tensions and continued depreciation of CNY in the first half of June, the bank’s preferred gauge of FX flows showed a dramatic jump in June outflows to the tune of $20 billion compared to an inflow of $13 billion in May, while the exporters’ trade repatriation ratio

2

China continues shadow banking crackdown

Via Caixin: Financial regulators have instructed 12 more trust companies to keep their investments in real estate in check and stop illegally funding developers, in an effort to stave off speculation in the rebounding property market. The widening clampdown on trust financing of real estate projects is a sign of regulators’ unease that the rapid

18

How China faked its growth numbers

Great work from Zero Hedge today: As far back as 2013, China’s macro-economic data has been ‘questionably’ smoothed at best, and outright fake at worst. Whether it is trade data (“never been faker” than in 2016) or aggregate production (2018’s massive GDP distortions), as economist Nouriel Roubini once asserted, China just makes its numbers up. This month was no

2

Chinese credit crawls higher

June new yuan loans were out Friday night. Total social financing was firm at 2.26tr yuan and bank lending was a more subdued 1.66tr: Given last year’s weak base effect, the year on year growth was a fat 91%:   Shadow banking is still trending lower: The rolling annual is off to the races: But M2