China Economy

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Chinese mortgage rates still rising

From Ifeng: iFeng: 房贷利率连升14个月!贷100万30年利息多出22万 In February 2018, the national mortgage interest rate continued to rise, rising for 14 consecutive months. According to 360 financial monitoring data, the average interest rate for the first home loan in the country in February was 5.46%, which was equivalent to 1.114 times the benchmark interest rate, which was a month-on-month increase

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Chinese credit signals still more slowing

February new yuan loans were out over the weekend and the slowing trend is intact. Total social financing came in at 1.17tr yuan of which banks made up 834bn: The shadow bank share rebounded to 28%: M2 rose slightly to 8.8% And the rolling annual for new loans stabilised briefly: But as usual the devil

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Chinese inflation signals further slowing

Chinese inflation is out and has several notable points. The CPI jumped to 2.9% on food spikes. But the PPI, which is a much better guide to industrial growth, continues to crash at 3.7%: A closer look shows the narrowness of the CPI spike: There’s no lasting problem there. But there is one in the

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China to focus more on deleveraging

From Scope Ratings: China’s annual gathering of the National People’s Congress (NPC), which opened on Monday, reveals the nation’s policy direction in a number of rating-relevant areas. While meaningful economic and financial reforms are positive for the nearto medium-term outlook, Scope notes concern on the long-term implications of the continued centralisation of power. Amid heightening

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China’s capital account stable

Via Capital Economics: PBOC remains on the side-lines, but trade war fears could trigger intervention  China’s foreign exchange reserve figures suggest that the People’s Bank remained a minor player in the FX market last month. But its pledge to allow a more market-driven exchange rate will be tested if the renminbi comes under renewed

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Does Emperor Xi bake-in Chinese stagnation?

Via the AFR comes Ken Rogoff: “I think it [the centralisation of power] is a huge concern in terms of the long-term growth trajectory of China,” he told the Australian Financial Review Business Summit. “Maybe they will make it work, but I guess I’m sceptical they will make it work for very long.” Professor Rogoff

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How to read different Chinese PMIs

Via Capital Economics: • The survey data don’t offer a clear signal on the strength of factory activity last month. The Caixin manufacturing PMI was largely unchanged but the official index dropped sharply. The former is generally the more reliable guide to cyclical trends. But we think it would be a mistake to ignore the

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Caixin China PMI firm

Caixin China PMI: Business conditions continued to improve across China’s manufacturing sector in February. Although growth in production softened from that seen in January, total new work expanded at a slightly faster pace. Meanwhile, companies continued to shed staff as part of efforts to reduce costs, which contributed to a further rise in the level

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More on China’s fading PMIs

Via Capital Economics: Weaker-than-expected PMIs highlight the downside risks to growth this year • A sharp decline in the official manufacturing PMI this month suggests that the survey data may finally be responding to the slowdown in growth shown on our China Activity Proxy late last year. And although a recovery looks possible in the

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China PMIs hit the wall

It’s been coming for a while. China’s February PMI is out and weakened materially to 50.3. Internals were if anything weaker: According to the scale of the enterprises, the PMI for large enterprises was 52.2% , down 0.4 percentage points from the previous month and still in the expansion range. The PMI for medium and small-sized enterprises was 49.0% and 44.8% , down 1.1 and 3.7 percentage points from the previous month respectively . From the classification index, among the five sub-indices

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Emperor Xi to take Japanese path

Via FT: China’s Communist party has cleared the way for President Xi Jinping to rule for life, and in the process strengthened the state’s “command and control” power over the world’s second-largest economy. Mr Xi’s unparalleled power theoretically allows him to push through painful reforms in the face of recalcitrant vested interests, particularly in state-dominated

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Chinese house prices resume slowing

China released January house prices over the weekend and the slowing trend resumed after a few months of firming. Month on month was 0.3% and year on year 5%: All tiers slowed tier one turned negative year on year: 33 cities now have falling or flat prices: Here’s the raw data: And the iron ore

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China property stress rises

Via Investing in Chinese stocks: The first warning signs were failed land auctions in Beijing at the end of 2017. Then signs of a collapse in shadow bank funding that. And now we know why at least one developer likened the credit market to the 1997 Asian Crisis: according to a report originally posted by 政商参阅,

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Chinese credit decelerates faster

The Chinese slow down is locked and loaded and getting worse. Credit for January is out and the trends are unmistakable. Total Social Financing was down -18.4% year on year to 3.06tr yuan. Bank lending was a high proportion of that at 2.9tr: The shadow bank component tumbled to just 5.2%: The rolling annual for

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Falling Chinese inflation is the growth canary

Friday saw the release of Chinese inflation which is cooling fast as the CPI slumped to 1.5% and PPL to 4.3%: As said before, the PPI is the key. It is an excellent leading indicator for Chinese industrial growth. I expect it to return to deflation in H2 as the commodities complex – especially ferrous – 

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Will China lift its capital controls?

Via Capital Economics today: • China’s foreign exchange reserves data suggest that the People’s Bank has not been directly intervening to limit the renminbi’s recent gains against the dollar. That partly reflects the fact that the renminbi has strengthened much less against other currencies than against the dollar. But it also suggests that policymakers are

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Mapping China’s vast credit bubble

Via Goldman: Since the latter part of 2016, we have witnessed renewed vigour from China policymakers to tackle the problems of excess credit growth. A number of policies aimed at reining in financial sector risks were introduced, including macro prudential measures for the banking sector and regulatory guidelines targeted at shadow banking activity. The net

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China services PMI booms

Ain’t no slowdown here: The Caixin China Composite PMI™ data (which covers both manufacturing and services) indicated that growth momentum across China picked up for the third straight month in January. Furthermore, the Composite Output Index rose to a seven-year high of 53.7, from 53.0 in December, to signal a solid pace of expansion. January

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Caixin PMI confirms Chinese slippage

Via Caixin: China’s manufacturing sector continued to expand at the start of 2018, with production rising to the greatest extent in just over a year. Growth was supported by further, albeit slightly softer, increases in total new work and new export sales. Higher production requirements led firms to increase their buying activity, while employment fell

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Chinese PMIs slow

China’s January PMI is out and growth has slowed. The manufacturing index softened: The chart looks a toppy: It’s been a cold Winter which may have overloaded the seasonal adjustments and there are the pollution shutdowns but, hey, slowing is slowing. The non-manufacturing PMI accelerated: But the detail was not encouraging for Australia: In terms

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Chinese property prices head for slow melt

China house prices are out for December and the correction is proceeding much as expected. Prices rose 0.4% on the month and actually lifted slightly in the year to 5.3%: Cities with flat or falling prices fell away to 15 of 70: But the rises are mostly muted: With top tiers flattening out at zero

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The China slowdown quickens

In the past week we’ve seen mounting evidence that Chinese growth is slowing into 2018 with more ahead. Let’s run through the data. First up was inflation which stalled in December. CPI was stable at 1.8% but the PPI fell sharply to 4.9% and it is always a good leading indicator for industrial growth: Trade

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WSJ drinks MB’s kool-aid on China

Wall Street Journal on a theme dear to our hearts – Chinese growth slowing: The Business Cycle Is Different This Time—Thank China Diverging Chinese and U.S. growth are behind the confusion in global markets right now Commodities and stocks have started 2018 with a bang. U.S. oil is trading over $60 a barrel for the

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Chinese inflation pips higher

Chinese inflation figures have just been released for December and shows a slight uptick in the CPI, but slightly less than expected: Texture from Forexlive: CPI % y/y …. 1.8% vs. expected 1.9%, prior 1.7% Food prices -0.4% y/y, non-food +2.4% y/y For the m/m, up 0.3% PPI 4.9% y/y, a bit higher than the

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IMF debunks “China is different” meme

The International Monetary Fund (IMF) put out a white paper Friday entitled “Credit Booms—Is China Different?” The answer? Not in any meaningful way. Here are some selective quotes and charts (the yellow notes are my comments – and apologies on the IMF’s behalf for the poor quality of their charts): Strong Chinese output growth after the

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Chinese PMIs show strength

From Capital Economics on the latest round of Chinese PMIs: A better-than-expected end to a strong year The PMIs ended 2017 on a strong note. But if the past couple of quarters are any guide, this may not translate into an improvement in the hard data. And even if economic activity did pick up last

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Chinese growth holds up well

China’s November data dump is out and carried no surprises with Industrial Production 6.1%, Fixed Asset Investment YTD 7.2% and Retail Sales YTD 10.3%: Under the hood, the all important property sector was mixed. Sales by floor area continue to slow YTD: But year on year sales for November lifted from -6.4 to 5.6. Floor area