China Economy


Chinese inflation remains crazy narrow

Chinese inflation is out and the CPI is still soft at 1.6% while the PPI is wildly overheated at 6.9%: The producer inflation pulse is slightly more broad than earlier in the stimulus boomlet but not much: It’s moved from steel and energy to metals and energy. Chinese activity is clearly not great outside of


What to expect from China post-Congress

Via Goldman: Interview with David Shambaugh David Shambaugh is Gaston Sigur Professor of Asian Studies, Political Science and International Affairs, and the founding director of the China Policy Program at the George Washington University. In addition to his work in academia, he has served on the staff of the US National Security Council East Asia


China’s shocking future for Australia

China is going to slow next year. We know it from the data already. But we’re also getting it from the politics, via PIMCO: After the radical anti-corruption purge of the last five years, the upcoming Party Congress is unlikely to be the typical midterm power reshuffle, as seen in 2007. The consensus is that


China reaffirms credit tightening

Via Reuters: The plan by China’s central bank to cut the amount of cash reserves that some banks must hold will not alter policymakers’ resolve to lower financial risk, the official China Daily reported an official saying on Monday. The People’s Bank of China said at the end of September that it would cut the


Caixin China services PMI goes splat

The Caixin China services PMi is out and splat: The Caixin China Composite PMI™ data (which covers both manufacturing and services) signalled a weaker expansion in total Chinese business activity at the end of the third quarter. Notably, the Composite Output Index fell from 52.4 in August to a three-month low of 51.4 in September.


China’s commercial property bid evaporates

Wish me luck as I wave you goodbye, via AFR: Chinese investors have paused all investments overseas until this year’s Chinese National Party Congress in November is over, a roadshow by Colliers International, the Commonwealth Bank of Australia and PwC has revealed. The trio, which toured China in September, said investors were reluctant to deploy


China signals that the yuan is gunna fall again

From Reuters: China’s central bank on Saturday cut the amount of cash that some banks must hold as reserves for the first time since February 2016 in a bid to encourage more lending to struggling smaller firms and energize its lacklustre private sector. The People’s Bank of China (PBOC) said on its website that it


China PMIs send mixed messages

China’s PMIs were all out on the weekend and sent very mixed messages. The official PMI boomed with everything at the fastest pace in five years: Aug-16 50.4 52.6 51.3 49.7 Sep-16 50.4 52.8 50.9 50.1 Oct-16 51.2 53.3 52.8 49.2 Nov-16 51.7 53.9 53.2 50.3 Dec-16 51.4 53.3 53.2 50.1 Jan-17 51.3 53.1 52.8


China’s “darker story for 2018”

Via Reuters: China’s economic growth likely slipped in the third quarter but was still in far better shape than last year, a private survey showed on Wednesday, while adding that major risks are looming for 2018. Profits at Chinese firms are much healthier and hiring remains robust, but a five-quarter boom in commodities which has


S&P downgrades China

From S&P: On Sept. 21, 2017, S&P Global Ratings lowered the long-term sovereign credit ratings on China to ‘A+’ from ‘AA-‘ and the short-term rating to ‘A-1’ from ‘A-1+’. The outlook on the long-term rating is stable. We have also revised our transfer and convertibility risk assessment on China to ‘A+’ from ‘AA-‘. The downgrade


Chinese capital outflow crackdown tightens further

Via Reuters: China will strengthen its supervision of overseas investment risks and capital flows from insurance funds, the insurance regulator said on Monday, adding that it will urge companies to improve their risk monitoring systems. China has cracked down this year on “irrational” overseas investment which it suspected was one way of disguising capital flight


Chinese house price boom ends

Chinese house prices for August are out and the  boom is caput. Overall prices still rose 0.2% on the month and 8.3% year on year but the trends are all down as macroprudential tightening goes to work: 24 out of 70 cities now have flat of falling prices: First and second tier are headed for falls.


Beijing gives Straya’s chief real estate agent the bad news

Via the AFR: Treasurer Scott Morrison believes China’s ability to safely defuse its growing debt burden has improved after seeking personal assurances from one of Beijing’s most senior leaders that deleveraging won’t derail the best synchronised global economic upswing this decade. As an ever-rising list of senior policy makers ring alarm bells over debt levels


Bitcoin crashes as China closes in

The Bitcoin ponzi-scheme is imploding as I write, down by more than one third from its peak: As China shuts the exchanges, from Yicai: September 14, the first financial reporter from the local Internet Financial Governance Office of the regulators exclusive informed that the regulation has been on the domestic bit currency trading platform under


China slows

And here it is with Chinese August industrial production at 6% versus 6.6% consensus, fixed asset investment at 7.8% versus 8.2% expected and retail sales at 10.1% versus 10.4% expected: Turning to all that matters for Downunder, building, real estate sales continue to slow: Floor area under construction is now up 3.1% year to date.


Chinese inflation remains fantastically narrow

Chinese inflation was out yesterday and remains fantastically narrow. The CPI has firmed to 1.8% and the PPI is now rebounding at 6.3%: Food showed some bounces but consumer is still soft overall: And the PPI remains almost exclusively a ferrous complex issue with a bit of oil thrown in: Chinese stimulus and reform have


China trade mixed

China trade for August is out with exports slowing to 5.5% and imports up at 13.3%: The surplus fell to $41.99bn. Iron ore imports were firm at 88.66mt: However, some of the supply constraints coming out of Brazil, India and RIO are apparent in those numbers. This should ease over coming months.


China moves to squash runaway coal

More excellent bulks material today from Macquarie: China commodities trip: Update on government policy and coal  Following yesterday’s note on steel, we summarise the main takeaways regarding government policy and the coal market from our recent trip to China. Coal miners around the world have benefited from the Chinese government’s “276 working days policy”


China’s shadow banks go sub-prime

Via UBS: Shadow loan growth slows, but only at some banks We reviewed the financial information of 237 banks across China with a focus on banks’ trust beneficiary rights (TBRs) products and directional asset management plans (DAMPs). Overall, these assets in aggregate grew at a much slower YoY rate of 14.6% YoY to reach Rmb14.1trn


Fade the Caixin China PMI

The Caixin China PMI was out earlier today: China’s manufacturing sector remained in expansion territory in August, fuelled by the strongest increase in new business for just over three years. Firmer foreign demand was a key driver of new order growth, with export sales rising to the greatest extent in over seven years in August.


One belt, one road away from Western realty?

A couple of recent developments out of China shows a big shift is underway in its capital outflows. First, it was the great global realty clamp: The Chinese government has moved to halt “irrational” overseas investments by restricting purchases of real estate and entertainment assets, a decision which could dent demand for Australian assets. The move,


China PMIs hint at looming slowdown

China’s official PMIs are out and manufacturing powers on at 51.7 with new orders at 54.1 but exports shrank at 49.7: More interesting was the non-manufacturing index with fell to 53.4: Sub-sectors, service business activity index was 52.6% , down 0.5 percentage points from the previous month , the service industry continued to grow, but the growth rate slowed slightly. From the


China signals more and less stimulus

Via Caixin comes less credit: China’s banking regulatory commission is drafting new rules covering the country’s three policy banks in a bid to tighten oversight of the giant institutions and ensure a level playing field for commercial lenders. As part of stepped-up regulation of the banking sector, the China Banking Regulatory Commission released draft guidelines


Macquarie: Yuan going higher

Macquarie is out with its latest thoughts on Yuan, suggesting it might hit 6.4 against USD soon: Last September, we had forecast that the RMB would hit 6.4 against the US$ at the end of 2017 (How to think about the RMB). And this January, we foresaw that the RMB would be the biggest surprise


A big China bear growls again

Cross-posted from Finanz and Wirschaft: Anne Stevenson-Yang, co-founder and research director at J Capital, warns that the monster bubble in the Chinese housing market is ripe to pop and that the Chinese currency will crash. It’s been exactly two years now since turmoil in China’s currency markets threw investors around the globe into panic. After


China taps the brakes again

Via Reuters: China’s key short-term money rates leapt to their highest in nearly five months on Wednesday, as the central bank drained funds for a third day, keeping up the pressure on financial institutions to scale back more speculative forms of financing. Similar bouts of tightness in June and July had raised fears of a


Chinese banks run out of credit

Via Reuters: Chinese banks are set to see a slowdown in lending growth in the second half of the year, having exhausted most of their annual credit quota, raising the spectre of corporate defaults as financing costs climb further in the world’s No.2 economy. Beijing’s crackdown on riskier lending has already stretched financing costs and


Chinese capital outflow continues to stall

Via Capital Economics:  Net capital outflows from China edged up in July, but this was due to seasonal factors. Adjusting for these, outflows actually eased last month to a five-month low, helped by more rapid foreign investment into the country. Looking ahead, while outflows are likely to persist, we think they will remain manageable.