China Economy

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Chinese house prices keep slowing

A double edged sword this. Chinese new house prices are out and continue to slow, up 0.58% in August and 8.3% year on year: Much of the slowing was in the breadth of cities with 20 flat or falling: Top tier cities remain subdued while lower tiers are cooling: Here’s the raw data: This will

18

Hong Kong simmers on

Via Hong Kong Free Press: Police have fired tear gas, rubber bullets and water cannon containing dye and tear spray at pro-democracy protesters, as Hong Kong entered its fifteenth week of demonstrations. The march, originally organised by the Civil Human Rights Front, was cancelled after the police objected to the event. But on Sunday, thousands

1

China’s credit impulse remains weak

I noted yesterday that Chinese broad credit is still struggling to rebound, quite unlike previous stimulus episodes: Some more charts today from WSJ Daily shot make the point again: More stimulus will be needed or growth will keep slowing. The PBOC is clearly loath to cut cash rate lest it crash CNY but it will

0

Chinese credit growth stalls

New yuan loans for august is out and the news is mixed. Total social financing was strong at 1.98tr yuan with banks at 1.2tr yuan: The shadow banking share rebounded: Growth is still positive though flattered by the base effect of last year’s deleveraging: The rolling annual is climbing: But M2 is flat-lined at 8.2%:

3

China’s pork shock deepens

Not much inflation to worry about in China today, unless you’re a pig, with the CPI at 2.8%. But check out pork as disease sweeps It is driving some pretty impressive month on month gains but will pass: Industry is plunging into deflation as overcapacity returns, down -0.8%: And the ferrous bust is yet to

14

Can China stimulate again?

Via the excellent Damien Boey at Credit Suisse: On Friday evening, the PBoC announced another 50bps cut to the reserve requirement ratio (RRR) for major banks. The announcement came just before the release of weaker-than-expected Chinese trade data, which revealed that year-ended growth in USD-denominated exports fell to -1% in August from 3.3%. Interestingly, the

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Hong Kong violence grows

After marches and water cannon Saturday things got worse as darkness fell. Via Hong Kong Free Press: Violent scenes erupted across Hong Kong on Saturday night, as the MTR closed five lines and police fired two live rounds in Causeway Bay. Local media reported that the warning shots were fired as police were conducting arrests

2

Chinese industry sinks into perma-recession

Chinese PMIs were out over the weekend and did little to inspire:. The manufacturing PMI remains in contraction: In August 2019 , the China Manufacturing Purchasing Managers Index ( PMI ) was 49.5% , a slight decrease of 0.2 percentage points from the previous month . In terms of enterprise scale, the PMI of large enterprises is 50.4% , which is 0.3 percentage points lower than that of the previous month , and is still in

26

Uh oh. China cuts capital flows to international students, realty

Oh dear. Via Nikkei: As China allows the yuan to depreciate to a level not seen in 11 years, financial authorities have rolled out measures to stem capital outflows from the mainland. The new rules include stricter oversight of banks in times of capital flight and restrictions on real estate developers’ access to foreign currency

2

Attention Australia, China is going ex-growth

Ratings agencies don’t get much right but this report is spot on and ahead of the curve, via S&P: – After four golden decades, China faces an inescapable slowdown due to demographics, deleveraging, rebalancing, and convergence. This is natural and mostly healthy. – Productivity will set the pace of China’s slowdown and will depend on

9

How fast is China really growing?

Via Fathom Consulting: Fathom’s China Momentum Indicator 2.0, our preferred measure of the pace of economic activity in China, slowed to 4.6% in June, the weakest reading since August 2016. Gary Cohn, former chief economic advisor to Donald Trump, argues that this slowdown reflects a strategic decision by China to rebalance the economy at a

16

Is Tianenman 2.0 inevitable?

From Jude Blanchette at the Center for Strategic and International Studies (CSIS) at the AFR: Some argue that Beijing will ultimately refrain from the use of violence due to a concern over its global reputation or domestic blowback. Kerry Brown of King’s College London predicted: “Anything too dramatic is going to be quite a high

1

Chinese credit sends out a major warning

Chinese credit data for July was out overnight and it was not pretty. Total social financing was a lousy 1.01tr yuan and banks were 1.06tr: New yuan loan growth is still up big year on year owing to last year’s deleveraging: But the shadow portion is falling away still: The rolling annual has stalled: M2

13

Ansell: “Brutal consequences” as manufacturing flees China

Via Domain: Ansell chief executive Magnus Nicolin has warned China of “brutal” consequences as manufacturers leave the country over rising costs and fears at the escalation in trade war with Donald Trump. “So many manufacturers are moving out of China at breakneck speed. You don’t see it in the China-reported GDP growth numbers yet. I

10

China’s Minsky moment intensifies

Via Zero Hedge: Step aside Baoshang Bank and Bank of Jinzhou, it’s time for Chinese bank bailout #3. Last month, when reporting on the imminent failure of yet another Chinese bank in the inglorious aftermath of Baoshang Bank’s late May state takeover, we dusted off a list of deeply troubled Chinese financial institutions that had delayed their 2018 annual reports…

44

Ray Dalio: Invest in China

Great video here from Ray Dalio on Cold War 2.0: His history is terrific but I disagree on the future: China’s investment-led economic model is running out of gas and will stagnate through the 2020s; The key driver is the failure of reform which leaves it wedged between falling productivity, rising debt and declining demographics; As

5

UBS: MOAR Chinese stimulus coming

Tell us something we don’t know! Via UBS after the US labelled China a “currency manipulator”: We think the latest US move will likely harden China’s position in trade negotiations. In our view, the latest US move, together with the unexpected US tariff hike on Chinese exports on August 1 could be seen as further

1

Beijing backs Hong Kong Lam duck

Via People’s Daily: Carrie Lam Cheng Yuet-ngor, Hong Kong’s chief executive, said on Monday that protesters’ sustained acts of disruption are pushing “our city, the city we all love and many helped to build, to the verge of a dangerous situation”. Lam, speaking at a news conference, pledged resolute action to maintain law and order

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Is Hong Kong the next Tiananmen?

Bloomie offers some thoughts today: A soft approach toward protesters addressing demands for democracy could show dissidents on the mainland that widespread upheaval can bring about political change, something that may imperil the Communist Party’s grip on power. At the same time, sending in Chinese troops to restore order risks an international backlash that may