China Economy

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China’s ghost city busts

China’s most famous ghost city, Ordos in inner-Mongolia, has regularly been cited as a prime example of China’s unsustainable construction-led economy. Last year, AlJazeera posted an explosive video showcasing Ordos’ ghost apartments and frenetic pace of construction, which exemplified the “build it and they will come” approach that has underpinned the Chinese economy. Then Business

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China links

Courtesy of Sinocism: SEC sues four Chinese for insider trading – FT.com – Four Chinese citizens have been sued on civil charges of insider trading for allegedly making more than $2.7m in profits by buying shares of Global Education and Technology before the language-testing company announced its takeover by Pearson last month. The US Securities

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China’s capital flight

Exclusively from Michael Pettis’ newsletter: On Wednesday night, after the Chinese markets closed, the People’s Bank of China announced that it had cut the minimum reserve requirement by 50 basis points to 21% for the large banks, and lower for the smaller banks.  With the announcement coming just hours before announcements by the Fed, the ECB

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China links

Courtesy of Sinocism: 人民日报-李长春观看大型原创舞蹈诗剧《金面王朝》 – Saab Owner in Talks to Attract Investment in Carmaker from Chinese Bank – Bloomberg – State Construction Engineering Plans U.S. Takeover in Its $2 Billion Push – Bloomberg – China State Construction Engineering Corp. (601668), the nation’s biggest builder by market value, intends to buy a U.S. construction company next

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Inside China’s ugly PMI

China’s official manufacturing purchasing managers index (PMI) dipped below 50 for the first time since the recovery yesterday.  The headline PMI declined to 49, below consensus of 49.8. Looking into the components probably provides an even gloomier picture.  New exports order declined further to 45.6 from 48.6, indicating continued deterioration of global demand.  New orders

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China loosens

People’s Bank of China just cut the reserve requirement ratio by 50 basis points, effectively from 5 December 2011.  The last time when the RRR was changed was 14 June, which was a hike of RRR by 50 basis points.  RRR for large banks are currently standing at 21.5%, so the 50 basis points cut would reduce

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China links

Courtesy of Sinocism: China’s online supermarkets, a great entry-platform for internationals – xinhua-China’s flagship literature magazine launches English version – Pathlight: New Chinese Writing – MW Reiterating Strong Sell on FMCN | Muddy Waters Research – Focus Media Responds Further to Muddy Waters Allegations — SHANGHAI, Nov. 29, 2011 /PRNewswire-Asia-FirstCall/ – – South Asia’s water: Unquenchable thirst | The Economist –

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China’s capital misallocation

Exclusively from Michael Pettis newsletter: For years I have been arguing that the Achilles heel of the Chinese growth model is the unsustainable rise in debt that comes as a necessary consequence of capital misallocation fueled by bank lending. Capital misallocation, I argued, was the nearly inevitable consequence of high investment growth over many years

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China’s Flash PMI tanks

The Chinese Flash PMI for November just hit the market and it’s bad news falling from 51 in October to 48, a 32-month low. Worse, look at the components above. New export orders actually rose, as I expected, probably on US demand. That means the slowdown is internal and that’s before we get much flow through from

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The Pascometer red lines on China

You’ll have to forgive my focus on the media today. There’s no data so I’m forced to turn on my peers. Regular readers will know of the existence of the Pascometer. That is, Michael Pascoe’s uncanny ability to call the precise opposite of the impending outcome. Sadly for the nation, today he covers China and

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China links

Courtesy of Sinocism: 药监局原副局长为升官诬告局长 逛天上人间被拍_新闻_腾讯网 – 近日,国家药监局原党组成员、副局长张敬礼因涉嫌受贿罪、诬告陷害罪、非法经营罪在市二中院受审。检方指控张敬礼的受贿额为117万余元;非法出售自己编著的书籍经营额达2300余万元,非法获利1600余万元;指使他人寄出1300余封诬告陷害他人的信件。 China Plays Down Sea Disputes to Woo Asian Nations from U.S. ‘Siren Song’ – Bloomberg – British man found begging in Chinese city of Guangzhou – Telegraph – “I am not begging, but I need help,” he told the Guangzhou Information Times newspaper. “I was on my way to Hong Kong

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China links

Links courtesy of Sinocism: China vows closer military ties with ally North Korea amid lingering tensions on peninsula – The Washington Post – U.S.-China tension spills over into Asia summit | Reuters – China’s Wen warns outside forces off sea dispute | Reuters – China Bashing on the Campaign Trail – Businessweek – Presidential candidates love to talk tough

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China property sliding

If you’re wondering why the ASX kicked down this afternoon then you need look no further than this from Bloomberg: China’s home prices fell in 33 of 70 cities monitored by the government in October, the worst performance since it expanded property curbs and scrapped the reporting of its national average housing data this year.

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China’s slowdown spreads to heavy machinery

      FT Beyond Brics flagged a report from Bloomberg Businessweek on the pessimistic outlook from Zoomlion Heavy Industry Science and Technology’s (1157.HK) boss Zhan Chunxin, saying that “Demand for construction machinery has shrunk drastically and growth will no doubt continue to slow next year”. There are a number of things that drive his pessimistic outlook, as

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China reboots money supply

Unknown to everyone except the People’s Bank of China, at the time of announcement of the monetary statistics, the PBOC had quietly expanded the definition of M2 money supply, and announced it only last night in a statement. The statement essentially said that the new M2 definition has been used in the October monetary statistics, which showed

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Is the Chinese consumer slowing?

The rebalancing of the Chinese economy will rely on consumers. Certainly, the Chinese government is well aware of the problem, and has put forward policies to encourage spending, but the result is mediocre.  While the share of exports is declining, the share of investment has been surging. Consumers are still not consuming nearly enough.   Now,

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The plunge in Chinese bank deposits

China’s latest monetary statistics could suggest that there is some easing as loans growth surprises on the upside.  But it contained one real shocker: household deposits fell by RMB727 billion. This has happened before, as deposits shift out of banks deposits to wealth management products.  Those products are off balance sheet, and most probably outside

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Deconstructing China’s trade data

The General Administration of Custom of China published the latest set of trade figures yesterday.  First, on a month-on-month basis, both exports and imports fell.  Exports fell by 7.2% in October on a non-seasonally adjusted basis, or –1.4% on a seasonally adjusted basis, while imports fell by 9.5% on a non-seasonally adjusted basis, or +3.2% on

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Can China control its descent?

Inflation in China continues to moderate.  The latest data from the National Bureau of Statistics shows that headline consumer price index (CPI) inflation has fallen from 6.1% yoy in September to 5.5% yoy in October, in-line with the consensus.  On a month-on-month basis, headline inflation in October was 0.1% vs. 0.5% in September.  Food prices is

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Wielding China’s reserves

I have argued a number of times that the Chinese yuan could depreciate, against the consensus. Now, according to the Financial Times, Fan Jianping, chief economist of the State Information Center, thinks that yuan should be allowed to weaken: Fan Jianping, chief economist of the State Information Center, a think-tank within the powerful state planning bureau,

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Expect falls in Chinese inflation

China’s inflation figures for October will be out on Wednesday.  The consensus is looking for a 5.4% yoy rise of the headline CPI, vs. 6.1% in September. China’s consumer prices inflation has been driven pretty much by food prices, and food prices have been stubbornly high for a while, which pushed the CPI inflation high, and indeed,

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Momentum vs rescue in China realty

The real estate market in China has started to move lower, at least so it seems.  Certainly, not everyone is happy about it, as some buyers who bought new flats just months ago are now sitting on an unrealised loss as property developers cut prices.  As we know, that anger boiled over in the smashing of some developer

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China set to ease?

Exclusively from Michael Pettis newsletter: Credit growth in China has been tight in the past month or two.  This hasn’t yet shown up in the GDP growth numbers, but if low credit growth continues, it will almost certainly result in much slower GDP growth.  The main thing generating growth in China is investment, and investment is largely

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China hard landing a 1 in 3 bet

Nomura has published a monster report, attaching 1-in-3 chance of a China economic hard landing by the end of 2014, defined as an “abrupt slowdown in real GDP growth to an average of 5% y-o-y or less over four consecutive quarters”.  They believe that the growth potential for China is 8% in real term, thus 5%

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China’s PMI decoded

China’s official manufacturing purchasing managers index (PMI) declined in October after improving for two months.  The headline PMI declined from 51.2 in September to 50.4 in October. Once again, new exports order dipped below 50 after improving for a month, indicating weaknesses in the global demand continues as the global economy slows.  The new orders index

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China will not ease up on realty

Li Daokui, academic advisor and member of the monetary policy committee of the People’s Bank of China, spoke last Saturday on the inflation outlook of China as well as real estate market regulation, according to Xinhua.  Although there has been some noise about easing real estate curbs amid recent aggressive price cutting and subsequent protests, Li Daokui’s view is

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China developer inventories climb

On Thrusday I pointed to the falling profits of Chinese real estate developers.  On Friday, Xinhua reported that real estate inventories of property developers continue to rise.  Among 75 of listed real estate developers listed in A share market, total inventories have reached CNY725.88 billion, an increase of 41.38% from the 3rd quarter of last year.  The debt-to-asset ratio is also

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Chanos: China slowdown just beginning

Everyone’s favourite China short, Jim Chanos warned Bloomberg overnight that the China slowdown has just begun. The anchor give bearish Jim a fair beating and I found a few of his responses were a little thin. But on the whole, the Chanos view that there is some distance to travel before China pulls off any

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China’s developer profits tumble

So, as Chinese real estate developers report their 3rd quarter results, we continue to see falling profits. Xinhua reports that for 47 real estate developers listed on the A share market which have reported their 3rd quarter earnings, revenue for the 3rd quarter amounted to CNY36.476 billion, a 12.5% decline compared to the second quarter.  Net

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Shanghai outlaws property discouting

Chinese property developers have been in trouble for the best part of a year.  Recently the penny dropped and many began cutting prices. Then guess what? People who already owned properties got cross and, in Shanghai, went to  smash the showroom and sales office of a developer offering 30% discounts on flats. But China is, after all, run by a