China Economy


China credit impulse sags

The little China financial crisis we have been tracking shows signs of a little easing as we enter a new week: Huarong bonds recovered some ground Friday after the financial regulator declared liquidity plentiful. While well short of any guarantee, some analysts expected that this is a turning point for the beleaguered debt manager. My


Chinese data misses big, economy slows fast

Lordy, China data is a mess. Base effects have distorted everything. If we look through the fog what we find mostly is a disappointment. First-quarter GDP was only 0.6%, far below the forecast 1.4%. That is disguised by year on year figures which are wonky as anything 18.3%: The internals for the month of March


China’s little finaincal crisis rolls on

Some more updates on the little Chinese financial crisis roiling its bond and equity markets. Analysts had hoped that yesterday would being relief form the PBOC, no such luck: Stocks fell as the PBOC withdrew liquidity as for a fourth straight month: Funding costs in the junk bond market will keep rising, noted ANZ. Meanwhile,


Chinese bond market seizure to smash iron ore?

One of the less well-understood dimensions of Chinese economic restructuring is the travails of its corporate bond market. For a few years now, authorities have been slowly removing the moral hazard that has dominated Chinese debt markets through its development phase. This causes periodic panics in financial markets but it should not. This is an


Chinese credit hits the brakes

New yuan loans were out last night and, as expected, China has hit the brakes. Total social financing came in at 34ootr yuan with banks at 2730tr yuan of that: The pop in shadow credit is receding: The flow of new credit was down by over one-third year over year: The rolling annual smooths that


China singles out real estate for slowing

Over the holiday period, the FT had another confirmation piece of the MB view that China is set to slow, particularly in the most commodity-intensive sector of real estate: PBOC has instructed banks to cut credit availability. Macquarie says concerns about virus-impacted growth are gone and structural reform has resumed. Chinese real estate sales surged


How fast will China slow in 2021?

For some months we have been of the view that Chinese growth will begin to slow materially in second half of this year. We reckon that robust export demand will be enough growth support for China to turn back to structural reform for the domestic economy. We have already seen confirmation of this in tightening


China PMIs rebound

Via China’s NBS: 1. Operation of China’s Manufacturing Purchasing Managers Index In March , China’s Manufacturing Purchasing Managers Index ( PMI ) was 51.9% , 1.3 percentage points higher than the previous month , and the manufacturing industry rebounded. In terms of enterprise scale, the PMI of large, medium and small enterprises was 52.7% , 51.6% and 50.4% , respectively , up 0.5 , 2.0 and 2.1 percentage points from the previous month , all of which were higher than the threshold. From the perspective


Chinese growth slowdown baked-in

Great analysis from Nordea: In 2021, China’s growth momentum cools off and the focus of global growth will temporarily move to other countries, which should be a negative factor for the CNY. In a longer horizon, China’s ambition continues to be high. China’s main political event of thee year, the National People’s Congress, came to


Chinese credit rebounds but not for long

Chinese new yuan loans were out last night and managed a little bounce out of the recent declining growth trend. Total social financing was at 1.71tr yuan while banks made 1.36tr of that: Thus the non-bank leading share fell to its lowest in a year: Year on year growth of new loans doubled on base


China’s COVID baby bust

BofA writes that: China likely saw a baby bust in 2020… • China saw a notable decline in the number of newborns in 2020. The pandemic will likely have a lasting impact on birth rate, combined with negative structural factors. • Policymakers should abolish the family planning policy and introduce more incentives for new births


China pulls handbrake with 6% growth target

For months now I have argued that China is tightening stimulus and we can expect it to slow through the second half of 2021. That has been clear in PBOC tightening at the margin plus some fiscal. Now, following last week’s National People’s Congress it is offical. Goldman has the details: On GDP growth target, it


Chinese PMIs weaken

Via China’s NBS comes the February PMIs. These were weak but even more so when one considers that the great Chinese New Year people migration was effectively cancelled this year meaning more people remained at work. It may simply be that that distortion has not been picked up by the survey’s seasonal adjustments: In February ,


Why did Chinese stocks tank?

While global stock markets are still on the march, Chinese bourses have been bashed over the past week in Hong Kong and Shanghai. Given China is the leading indicator for this business cycle, first into and out of the virus, with accompanying stimulus, is this the harbinger for global markets? First up, the correction so


The Chinese economic slowing has resumed

Mizuho: Despite January’s negative inflation rate, we still look for mildly positive inflation for 2021. In this note, we examine a few factors that are likely to impact China’s inflation throughout the year, including CPI’s base effect and revised weights, the pork cycle, consumer confidence, credit growth and the external environment. In detail, the base


China’s mass human migration…cancelled

Mizuho: ◼ Usually, it takes two to three weeks for China’s industrial production to recover to full capacity post a lunar new year (LNY) holiday as rural migrant workers return to the city. However, such a recovery is expected to arrive earlier this year as many workers spent the holiday in the city due to


Chinese credit slowdown intensifies

China’s new yuan loans for January were out last night and the slowdown is intensifying. Total social financing looked like a big number at 5.17tr yuan with banks accounting for 3.58tr of that: But year on year credit flow growth plunged to just 2% and the 3MMA is similar: The rolling annual has stalled: With


Uygher camps “system of mass rape, sexual abuse and torture”

Via Sinocism: ‘Their goal is to destroy everyone’: Uighur camp detainees allege systematic rape – BBC News First-hand accounts from inside the internment camps are rare, but several former detainees and a guard have told the BBC they experienced or saw evidence of an organised system of mass rape, sexual abuse and torture. Tursunay Ziawudun,


Chinese PMIs slow sharply

Via China’s NBS come fading PMIs, no doubt in part owing to virus disruptions. The falling new orders in construction are a worry for iron ore. In January , China’s Manufacturing Purchasing Managers Index ( PMI ) was 51.3% , down 0.6 percentage points from the previous month , and was above the threshold for 11 consecutive months, indicating that the manufacturing industry continues to expand, but the


China to slow faster!

Via Mizuho: On a sequential basis, we see renewed pressure on China’s economic activity in 1Q21. Apart from less favourable seasonality during the lunar new year holiday (LNY,11–17Feb), recent mini COVID outbreaks in Jilin (273 local cases YTD), Heilongjiang (429) and Hebei (919), as well as the latest requirement of 14-day quarantine at home for


China plots the doom of iron ore

It’s not new. We’ve seen it before. Every attempt fails. But a new plan is afoot to end China’s real estate driven growth addiction that keeps Australian iron ore above $30. Via Societe Gereral: Policy directions in 2021: normalisation, de-risking and reforms The Central Economic Work Conference reiterated policymakers ’intention to continuing with policy normalisation


The great China slowing has already resumed

Via Goldman: China – stability may be necessary and sufficient. A strong print in Q4 growth rounded off the solid recovery we have seen in Chinese GDP through 2020, and it is important to reiterate that a robust growth backdrop in China is a key ingredient ofour pro-cyclical stance across global markets. It is often


China mulls lifting coal ban as Aussie trade war backfires big

Via Morgan Stanley: Increasing noise on possible policy reversal: Shanghai Metals Market (SMM) reported yesterday that the Chinese government was in the preliminary stages of lifting its informal ban on Australian coal imports, but that such a move would still need to be approved by senior leaders. There has been no official comment on the article.


China’s much vaunted consumption rise is drivel

Via Bloomie: While much of the world was under stay-at-home orders on the first day of 2021, Chinese moviegoers packed into cinemas to watch the romantic comedy Warm Hug and the drama A Little Red Flower, generating the country’s biggest New Year’s box office on record. The 545 million-yuan ($84 million) splashed out on movie