Jim Chanos is still short everything associated with Chinese fixed asset investment, including all things commodities. He reckons the 2012 surprise is Chinese weakness. Gulp. For the contrary case try CLSA’s Andy Rothman.
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Primary Section
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China doom mongering
Exclusively from Michael Pettis’ newsletter: The world seems to be rapidly moving away from the China-is-the-most-successful-economy-in-the-history-of-the-world rant to the China-is-weeks-away-from-collapse rant. But repeating a story often doesn’t make it more true. My guess, and it is only a guess, is that China can continue with the current growth model for at least another four or
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China versus India
Earlier, I read a wonderful book by Yasheng Huang on Chinese growth model. He is a critic of the Chinese way. He believes that the current Chinese growth model is more like South American model (old Brazilian way, for example) which ultimately failed. In the below video, he compares China with India, and the gist of his
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China is not a white knight
The last day or so has seen a string of wild rumours about China buying European bonds. A hilarity in the whole thing is that in another report, Giulio Tremonti, the Economy Minister, complained that Asian investors just won’t buy bonds because the ECB isn’t buying enough. So are Chinese really buying? Probably. There is something
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China has a good month
Over the last few days, we’ve had an avalanche of Chinese data for August and the results were solid. First off, urban fixed asset investment for Jan-August 2010 increased by 25% compared to the same period a year ago, slightly lower than expectation of 25.5%. Of which, fixed asset investment from state-owned enterprises increased by
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The imminent yuan float meme
The kind of attention the Chinese yuan gets is fascinating. At the height of the debt ceiling nonsense and the subsequent days, the yuan surged to a record high against the $US, and made some of the largest moves on record. Countless reports told stories that it signaled Beijing’s ambitions for internationalisation, or the use
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Hong Kong property stall
The Hong Kong government just sold three pieces of land. The FT reports that the result is quite bearish. The results were actually fairly mixed. The first site being sold was Tseung Kwan O area 66A, which can provide 792,898 sq. ft. of residential space. The pace of the auction was extremely slow, and the government threatened
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Much bark, little bite
With somewhat slower economic growth and an increasingly clouded outlook in the global economy, I have been wondering what Chinese policy makers would really like to do amid stubbornly high inflation. Yesterday, we had Brazil cutting rates, which baffled some analysts, but tells you that some emerging economies are worried about growth. If anyone has been hoping
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Chinese manufacturing takes a hit from abroad
The just released official manufacturing purchasing mangers index (PMI) for China shows a small rebound in August. The headline PMI rose from 50.7 in July to 50.9 in August, just slightly below market expectation of 51.1. The new orders index was flat at 51.1, and output rose from 52.1 to 52.3. Raw materials inventory rose from
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Hong Kong money supply
The Hong Kong Monetary Authority published its monetary statistics for July yesterday. Hong Kong dollar M1 money supply increased by 3.6% in July on a non-seasonally adjusted basis compared to June after a 3.7% drop in June. On a seasonally adjusted basis, Hong Kong dollar M1 money supply rose by 4.2% in July. Hong Kong dollar M2 money
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Chinese bank arrears rise
Caixin has a good summary for 14 of the Chinese banks which have recently reported their first half results. According to the report, overdue loans have increased 6.35% at the end of the first half compared with the end of last year. Out of 14 banks, only 3 banks did not report rising overdue loans, and
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Pettis: 3% growth coming soon to China
From Michael Pettis comes this sobering series of forecasts for Chinese growth. Wake up, Canberra. My basic sense is that we are at the end of one of the six or so major globalization cycles that have occurred in the past two centuries. If I am right, this means that there still is a pretty
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China will slow
In this week’s China post. I want to direct readers to some interesting recent reports on the Chinese economy. The first report, entitled China’s Empty Apartments, is a fascinating two-part series of posts on China’s housing market, written by freelance writer Michael Gsovski, who is a New Yorker that recently spent a year living in
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Wenzou’s secret credit
As the People’s Bank of China tightens monetary policy, small and medium sized businesses are having a hard time borrowing from the formal banking system. As a result, many turn to the underground banking system which basically consists of loan sharks and pawnshops. Last week, I posted on the early phases of run on property assets in Wenzou. Now, a new Caijing report
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Chinese developers feeling some pressure
According to Xinhua, half of the listed Chinese real estate developers (roughly 65) have reported their first half result. And the results are a concern. Within these 65 developers which have reported, revenue surged from from RMB75.139 billion in the first half of 2010 to RMB83.965 billion, an increase of 11.75%. Profits attributable to shareholders
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China flash PMI offers hope
From Bloomberg on China, the HSBC ‘flash’ PMI: August PMI preliminary reading at 49.8; output index at 49.4 also rebounds from last month’s 48. July HSBC PMI final reading was 49.3, 1st contraction in yr New orders, new export orders, employment may contract: HSBC NOTE: China reported July manufacturing PMI at 50.7, lowest reading since Feb.
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Hong Kong inflation bubbling
Inflation in Hong Kong continued to rise in July. The headline consumer price index rose by 7.9% compared to a year ago, up from 5.6% in June. Excluding the effect of all government’s one-off relief measures, the core inflation rate was 5.8% vs. 5.5% in June. The large discrepancy was due to low base effect on public housing
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Weekend special: Perverse Chinese banking
Take an hour today to view this spectacular discussion about the contemporary Chinese banking system from G+ (h/t Patrick Chovanec). It includes the history of reform, the epic fallout of the 08/09 stimulus, real levels of debt, off balance sheet and non-performing loans, asset bubbles, the role of inflation, triggers for crisis, durability of growth,
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Chinese house prices stall
Yesterday, the National Bureau of Statistics published the latest set of widely followed but wildly unreliable home prices indices for the 70 cities. For newly constructed homes, prices fell in 14 cities on a month-on-month basis (vs. 12 cities in June), while 17 cities recorded flat prices )vs. 14 cities in June). On a year-on-year
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Run on Wenzou real estate
Wenzhou is a city famous for producing lighters. It also produces many real estate speculators who have been buying properties everywhere from their home town to Hong Kong, and probably as far as Dubai. Now in their home town, however, they are scrambling to sell their real estate holdings. NBD reports that the rush to sell started probably two weeks ago.
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How China can (but won’t) save global growth
Once again we must turn to PRC owned and controlled media to get a balanced assessment of the prospects for Chinese reform policies, its contribution to global growth and the scope for stimulus in the event of a Western recession. Enjoy the following discussion and take a moment to wonder why Australian media is incapable
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Hong Kong property hits a wall
Recent market turmoil and a poor land auction result have pushed the consensus view of Hong Kong property towards a possible correction of as much as 10%. At the same time, some hope that renewed US stimulus will flow through to Hong Kong real estate prices. I take issue with the view that US quantitative easing will weaken the
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Conference Board: China slowing significantly (not)
From Bloomberg: Aug. 16 (Bloomberg) — Growth in China, the world’s second-biggest economy, is slowing “significantly,” according to The Conference Board, a New York-based research organization. “The economy is significantly moderating right now and also over the next couple of months,” Bart van Ark, the organization’s chief economist, told Bloomberg Television from New York ahead of the release of
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China’s slowing M2
Late last week, the People’s Bank of China published the latest set of monetary statistics, which, I think, surprises on the downside. M2 Money supply grew by 14.7% compared to a year earlier to RMB77.29 trillion, lower than the expected growth of 15.8%. Money supply growth has fallen further below the pre-crisis average level of 16.76%. M1
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China’s summer of discontent
Anxiety appears to be building on multiple fronts in China, threatening to spill over into social unrest. First, with the sharp rise in home prices and rents squeezing many younger Chinese out of the housing market, as well as widening the wealth divide, the Chinese Government is under intense pressure to improve housing affordability. The
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Chinese inflation accelerates
In news that the global economy did not need, inflation in China shows no sign of coming under control, even as the People’s Bank of China has slowed its pace of tightening in the past 1 or 2 months. The headline consumer price index (CPI) rose 6.5% on an year-on-year basis vs. 6.4% in June, and
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China’s morbid dependency
In the lead up to Standard and Poors’ (S&P) downgrade of US Government debt, the largest holder of US Treasuries – China – had stepped-up its warnings and condemnation of the US Government’s fiscal mis-management and its deteriorating debt repayment capability. In November 2010, China’s Dagong Global Credit Rating Co. reduced its credit rating for
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China’s shadow banking explosion
Fitch recently released an eye opening report on the staggering growth of leverage in the Chinese economy (h/t Bernard Hickey). As many readers will be aware, the Chinese Government has been implementing policies aimed at curbing bank lending in order to slow inflation. However, as is often the case with regulation, these policies have shifted
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Chinese PMI slows, but how much?
China’s official manufacturing purchasing managers index (PMI) in July continued to show signs of slowdown, albeit at a moderating pace. The headline PMI fell from 50.9 to 50.7, better than the expected number of 50.1. The new orders index increased from 50.8 to 51.1, which is a bit of a good news, while output fell
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China’s crumbling infrastructure model
China’s high-speed rail accident has attracted a lot of attention. Even the FT Lex coloumn has something to say about it, believing that the pace of investment should be slowed. While I have been arguing here for a while that investment has to be slowed, it is rather harder to see if the “accident” can