China Economy


China formalises restricted capital outflow

Via AFR: 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, designed to curb capital outflows and lessen downward pressure on the Chinese currency, also compels mainland companies to align themselves more closely with Beijing’s foreign


The Chinese slowdown is coming

Charlene Chu at Autonomous Research is making waves at the FT today: Corporate investigator Violet Ho never put a lot of faith in the bad loan numbers reported by China’s banks: crisscrossing provinces from Shandong to Xinjiang, she’s seen too much – from the shell game of moving assets between affiliated companies to disguise the true


Chinese credit booms on (or does it?)

China’s July credit numbers were out and show ongoing strength with Total Social Financing at $1.22tr yuan and bank lending only 826bn of that: Shadow banking rebounded after a few months of downtrend: Year on year financing jumped after a weak July 2016: The rolling annual continues to lift: But M2 to fall: A mixed


Some more on a slowing China

As I noted earlier, Chinese data today was the first persuasive signal that growth is set to slow as expected in H2 this year. Capital Economics has more:  The activity and spending data for July all came in below expectations, reversing most of improvement seen at the end of Q2. Nonetheless, industrial production still


Suddenly China slows

I’ve been waiting for it for while and now we get our first clear evidence of slowing growth arising from policy tightening. Chinese data for July has just missed across the board with Industrial production in at 6.4% vs 7.1% expected, fixed asset investment at 8.3% versus 8.6% expected and retail sales at 10.4% versus


Chinese trade surplus bursts higher

by Chris Becker This will get banana man trading long stocks and iron ore this afternoon! Trade balance figures for July in China have just printed, via Forexlive: China trade balance for July: CNy 321.2 bn. A beat for the surplus expected CNY293.55bn, prior was CNY 294.30bn Exports y/y: +11.2%. A miss on exports expected +14.8%, prior


Chinese manufacturing PMI indicates soft landing

by Chris Becker It’s PMI day in China – an important economic print that will have iron ore and other commodities moving, let along satellite stock markets like the ASX200. Today’s headline manufacturing PMI print came in a little lower than expected at 51.4 vs 51.5, slightly below last month’s 51.7 with non-manufacturing at 54.5


China is slowing

Via Capital Economics:  Our China Activity Proxy (CAP) shows that growth in China remained strong in Q2, although our new seasonally-adjusted data point to a marked slowdown in momentum since the start of the year.  The CAP is our attempt to track the pace of growth in China without relying on the official


More Chinese accelerator and brake

From Reuters: China’s Politburo, the Communist Party’s top decision-making body, said Beijing will implement a “proactive” fiscal policy and “prudent” monetary policy in the second half of the year, the official Xinhua news agency reported on Monday. China will also strengthen coordination of financial regulation, stabilize the property market and prevent systemic financial risks, according


Chinese capital outflow keeps slowing

Via Capital Economics:  Net capital outflows from China were broadly unchanged in June as greater inflows from foreign investors helped to offset increased outflows due to Chinese investment overseas, including in Belt & Road countries. China’s growing appetite for foreign assets means that outflows are likely to persist. But unless sentiment on the renminbi


What’s holding up Chinese property?

Recall that three-quarters of Chinese floor space under construction is in lower tiered (3&4) cities, from the RBA: Thus today’s bifurcated property market is important with prices stalled or falling in top tiers but still rising in the lower tiers: This is the advantage of Chinese macroprudential which, unlike Australia’s piss-ant efforts, has been strong


Chinese house prices stagnate

Chinese house prices are out and show an on ongoing steady stagnation in June. Prices were up 0.7 month on month and 10.2% year on year: Top tier cities are now dead in the water and falling towards zero year on year fast. Lower tiers are keeping on keeping on, supporting the headline number: Still,


The key to Chinese reform

Macquarie has a nice warp on China today: China’s top leaders just finished the National Financial Work Conference, which is held every five years. The focus of this year’s meeting was on reducing financial risks. A committee will be established to oversee the financial sector, but it’s far from the “super-regulator” which had been speculated


China to guard against “black swan” and “grey rhinocerous”

At the China Daily, the deleveraging message is heard amid thundering hooves: Since the 18th National Congress of the Communist Party of China, the central government has attached great importance to the financial work, especially the prevention of financial risks, and adopted a series of measures to strengthen financial supervision, which has taken the development


Chinese growth thumps along

Chinese June QTR growth figures are out and were glowing. GDP was steady at 6.9%: For June, industrial production surged to 7.6%, fixed asset investment was stable at 8.6% and retail sales were up 11%: Turning to realty, June defied tightening with a big rebound. Floor area sales lift to 16.1%: Floor area year to


More on China’s hawkish turn

Via Morgan Stanley: Bottom line: The latest National Financial Work Conference, chaired by President Xi, confirms continued policy focus on reining in leverage and financial risks, including a pledge to continue with economic deleveraging (particularly in SOEs), and establishing a Financial Stability Development Committee to enhance policy coordination and close regulatory loopholes. We think it


China edges towards more reform

Via the FT: Xi Jinping instructed China’s state-owned enterprises to lower their debt levels at the weekend but stopped short of announcing the creation of a new financial super-regulator to rein in mounting risks in the sector, as some had expected. “Deleveraging at SOEs is of the utmost importance,” the Chinese president said at the


China trade remains strong

China trade out earlier with export growth in at 11.3% year on year and imports 17.2%: June was another solid month of iron ore imports at 94.4mt: No slowdown there. Chinese steel exports are still slowing to 6.8mt: That will continue as China manages its oversupply issues.


Another signal of forthcoming Chinese reform

Xinhua declares game on for entrepreneurs: China’s cabinet on Wednesday adopted guidelines with detailed measures to boost mass entrepreneurship and achieve innovation-driven growth. China will deepen reforms in innovation-driven development to expand the scope and raise the level of mass entrepreneurship and public innovation, according to a statement released after the State Council’s executive meeting


Chinese credit continues to slow

It’s a twisted road but the slowing is coming. Bank loans in June were strong at 1.54tr yuan while total social financing was a little higher at 1.75tr yuan: Banks are lending their butts off but shadow banking is being squeezed: Aggregate new loans were up 9% year on year: The rolling annual is still


Chinese capital outflow turns to trickle

Is the yuan done falling? Via Capital Economics: China’s foreign exchange reserve figures for June suggest that, having eased markedly since the start of the year, capital outflow pressures remained muted last month. We think this shift could prove durable, with the renminbi performing better than expected in the coming years. • The value of


Has China tamed its property cycle at long last?

From Caixin: A report released by China’s central bank said that measures introduced to deflate a property market bubble have met with initial success, and capital inflows into the property market have eased as the number of personal home loans moderated. The 152-page China Financial Stability Report, published by the People’s Bank of China Tuesday, stressed that


China plots more deleveraging

Via Capital Economics:  Earlier this week, the People’s Bank vowed to do more to regulate asset management products. While it is wise to seek to defuse the risks from these products sooner rather than later, doing so without triggering financial volatility will be no easy feat given the scale of banks’ off-balance sheet exposures.


The Chinese debt time bomb

By Leith van Onselen Fairfax’s Matt Wade is the latest to warn on China’s debt time bomb: Many thousands of Australian jobs depend on the health of the Chinese economy… For some years now China’s economic growth has been underpinned by an explosion in corporate lending. China has accounted for half – yes half –


China sets date for crucial financial reform meet

Via SCMP: Beijing will hold a long-delayed key financial work conference this month, putting the focus on financial security in the run-up to an expected changing of the top Communist Party guard later this year, sources and Chinese media said on Wednesday. The big issues up for debate could include an overhaul of the financial


PBOC stays the course

Via Bloomie: China’s central bank said the economy and financial markets are generally stable, though the environment is still “complex,” adding separately that risk prevention should be given greater emphasis. The People’s Bank of China also said the recovery in major developed nations is continuing, according to a statement released Tuesday after a meeting of the advisory