China Economy

4

China mulls trade war self-harm

The AFR is reporting that China is stumped by trade war or, more to the point, Trumped: “We did get a sense of deep concern about the trade tension with the United States and that we could be in a period of prolonged and protracted trade tensions, and there isn’t all that much that the

8

China unleashes its property monster

China released August property price data over the weekend and the news is boom! Prices rose 1.4% on the month and 7% year on year: Price rises are widespread: It’s now only a handful of top tier cities sitting it out. Those with the most draconian macroprudential measures: Lower tier cities are accelerating: As we saw in

5

Chinese credit eases off the bottom

The PBOC released new yuan loans for August last night the news was Total Social Financing came in at 1.52tr yuan with banks making up 1.123tr of that: Shadow banking made its first positive contribution for four months: Year on year growth was up 2.7% but the three month moving average remains well negative at

8

China is out of trade war responses

Via the WSJ: Chinese leaders are stepping up a charm offensive with U.S. multinationals and dropping earlier threats of retaliation as Beijing changes tack to keep the trade fight with Washington from scaring off foreign investors. Beijing is offering a reassuring message in its outreach to American companies. At a meeting last month, Liu He,

0

Chinese inflation eases

Via Capital Economics: Pork prices jump, shipments to US accelerate despite tariffs • Consumer price inflation picked up last month, as African swine flu led to a jump in pork prices. But with broad price pressures still relatively subdued, it’s still too soon to sound the alarm on inflation. Export growth slowed, though this appears

0

China’s trade surplus falls away

China released August trade numbers over the weekend and it’d good news and bad news for the economic war. Imports rose 20% and exports 9.8.% with the surplus narrowing to $27.9bn: The Chinese trade surplus is trending down though, alas, with the US it hit a new record high at $31.05bn. We might expect this

5

China forex reserves resume falls

Bad news for Aussie realty comes form Capital Economics: The People’s Bank is keeping its FX intervention off its balance sheet • The People’s Bank still appears reluctant to deploy its FX reserves in order to support the renminbi. We suspect that it is leaning on state-owned financial institutions to sell foreign assets in its

46

Rise of the angry China

Via The Australian: China’s representative at the Pacific Island Forum in Nauru has stormed out of talks with forum nations after a dispute with host nation leader, President Baron Waqa. The Chinese “dialogue partner” left the closed doors meeting after what was described as a “terse exchange of words” with Mr Waqa. Nauru, which recognises

1

China still slowing…

Via Capital Economics: • The latest survey data suggest that China’s economy continued to come under pressure last month. We expect further weakness ahead despite the shift toward policy easing. • The Caixin manufacturing PMI declined from 50.8 in July to a 14-month low of 50.6 in August. This was weaker than anticipated (both the

1

Caixin China PMI hits 14-month low

The Caixin China General Manufacturing PMI has been released, which has edged down to a 14-month low: August survey data signalled a further improvement in Chinese manufacturing operating conditions. Output continued to expand, and at a quicker pace than in July. However, new orders rose at the slowest rate since May 2017, while export sales

1

China PMI steady

Via China’s NBS: In August , the manufacturing PMI was 51.3% , up 0.1 percentage points from the previous month and unchanged from the annual average. Since the beginning of this year, except for the Spring Festival, the index has been operating within the 51.0% – 52.0% boom period, and the overall manufacturing industry has

1

China economy to get worse before it gets better

At  Reuters today: China’s investment growth, already at record lows, may weaken even further in the future and authorities should step up fiscal and financial measures to give it a boost, the state planner said on Monday. Beijing is urging more infrastructure spending as the economy faces both domestic and external risks, such as U.S.

9

Rickards: Trump will break China

A nice piece from Jim Rickards cross-posted from the Austrians at Daily Reckoning: I’ve written for years that Chinese economic development is partly real and partly smoke and mirrors, and that it’s critical for investors to separate one from the other to make any sense out of China and its impact on the world. My longest piece on this topic

3

Will China 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

3

US and China enter “new Cold War”

The Australian is very hopeful indeed: With the US and China set to ­resume trade talks, investors are expected to anticipate a breakthrough, pushing shares, commodities and the Aussie dollar higher before talks on Wednesday and Thursday. There could be some profit-taking by mid-week amid fears that the talks might not prevent tit-for-tat tariffs on

12

Chinese house prices off to the races

The great Chinese ponzi is alive and well with house prices for July off to the races up monthly 1.1% and annual 5.8%: Price gains are broad-based outside of a few top tier eastern megacities: Which is a lot of them: Here’s the raw data: And the prices versus iron ore inventories tracker: Given these

1

Chinese growth slides away

Chinese July data is out and the overall message is a clear slowing, especially in the building economy with fixed asset investment slumping to 5.5%, industrial production at 6% and retail sales at 8.8%: But real estate sales have turned and are still rising steadily year to date: Year on year took off, perhaps on

2

Chinese credit still has the brakes on

China released new yuan loans last night and the result is more slowing in July. Bank lending was strong at 1450bn yuan. But total social financing was much less so at 1040bn yuan meaning shadow finance contracted for the third straight month down a whopping -440bn yuan:: This is now an unprecedented crash in shadow

7

China is fantastically reliant upon Australia

We all know how it ends. Eventually China is overwhelmed by its own bad debt. The dreams of empire crumble to empty vestiges, wealth greys with demographics, dynamism sinks into the rentier bog and endless growth into secular stagnation. This is China’s destiny and Australia will suffer for it. But in the meantime we are

0

China pushes MOAR stimulus

Via Bloomie: The People’s Bank of China won’t implement stimulus in “flood-irrigation” style, according to the quarterly monetary policy report released Friday night in Beijing. Prudent monetary policy should maintain neutrality and “keep balance between tightening and easing,” indicating a slightly easier bias than it did three months ago. …The bank said it will flexibly

8

Is the Turkish crisis a dry run for China?

The classic emerging market external crisis engulfing Turkey should be of great interest to Aussie investors. As is always the case when the US Federal Reserve tightens monetary policy, capital repatriates from far flung jurisdictions where it sought out higher returns in the good times. If the emerging market in question was not careful during

27

Trump freaks out the Chinese communists

Via Reuters: A growing trade war with the United States is causing rifts within China’s Communist Party, with some critics saying that an overly nationalistic Chinese stance may have hardened the U.S. position, according to four sources close to the government. President Xi Jinping still has a firm grip on power, but an unusual surge

2

Chinese trade pushes through tariffs

Via Capital Economics: US tariffs have so far had little effect on Chinese export growth • Chinese export growth held steady last month with few signs of much impact from the first round of US tariffs on $34bn worth of Chinese exports, which came into force on 6th July. Import growth jumped but this has

3

China keeps boot on capital flight

Via Capital Economics: No evidence of direct PBOC intervention in FX markets, for now  A rise in China’s foreign exchange reserves in July suggests that the People’s Bank did not deploy them to defend the renminbi last month. It may do so soon, however, given growing concerns over outflows.  The value of the

1

Westpac: Chinese economy to slow

Elliot Clarke, CFA Senior Economist Frances Cheung, CFA Head of Macro Strategy, Asia At the beginning of 2018, we outlined a growth view for China that would underwhelm the expectations of both the market and Chinese authorities. Against the official 2018 benchmark of 6.5% growth, we forecast 6.3% for 2018 then 6.1% in 2019. Given

0

Westpac: closer look at Chinese PMI

From Elliot Clarke at Westpac: For China’s PMIs, July was a month where little changed. Both the official manufacturing and service PMIs edged lower, but remained near long-run average levels. The Caixin manufacturing index held to its long-run average. In recent updates, we have paid particular attention to the external demand and employment indexes from