Courtesy of Also Sprach Analyst Just how different is China’s monetary policy run compared to the West? Perhaps not much. They cut and raise interest rates just as everyone else does. Or not. China is not different from the rest of the world in the sense that Newton’s three laws of motion and law of universal gravitation work in
China’s trade balance for June is out and the weakening trend continues. Year on year imports were up 6.3% and exports were up 11.3%. Exports beat expectations and imports missed by a wide margin. The declining trend for growth in both is very clear in the chart: The trade balance was a fat surplus of
Chinese inflation for June is out and posted another sharp decline to be just 2.2% year on year. The biggest falls were in the food category: Meanwhile the PPI is looking a bit scary, accelerating its decline on the month and fully deflating at -2.1% year on year. The declines are broad based. With especially large falls
Signs of slowdown in the Chinese economy are obvious, and it is being felt by more and more industries. Last week, there was a rumour that Sany Group plans to lay off some 30% of its workforce (although the rumour was subsequently denied), highlighting the impact of slowing growth and, in particular, slowing fixed-asset investment, on sales of heavy equipment Facing
Courtesy of Also Sprach Analyst The People’s Bank of China, just like last time, has announced interest rates cuts at the precise moment when the Bank of England announced its rate decision. The 1-year deposit rates are cut by 25 basis points with rates at all maturities being cut by a varying degree. Most notably, fixed deposit
Courtesy of Also Sprach Analyst. I have noted before that towards the end of May the Chinese government gave up on rebalancing the economy and started reflating the real estate market. Although the central government as well as the central bank have repeatedly denied that they have given up, the reality is that they have, especially at the local
Exclusively from Michael Pettis’ newsletter. We are beginning to see an increasing reluctance to respond to evidence of bubble-like behavior in China with explanations of how these things don’t mean the same thing in China as they do in other countries. Our normal understanding of economics doesn’t apply to China, we are earnestly told by the
The Chinese services PMI rose in June to 56.7 from 55.2 in May. As Reuters says: China’s fast-growing services industry has so far weathered the global slowdown much better than the factory sector, with the PMI consistently signaling healthy expansion and hitting a 10-month high of 58.0 in March. And I guess, anywhere but Australia
Courtesy of Also Sprach Analyst. People in Hong Kong have a long history of mistrust of China. This city, after all, was a colony of the British Empire for more than a century, and has only been under Chinese rule (under one country two system, to be precise) for a mere 15 years. In this city, you seldom
As we know, yesterday’s offical China PMI was dour, it was followed up by the final HSBC PMI today, which dropped marginally since the flash to 48.2. Now we have Korea and Taiwan signalling more of the same. Korea came in at: 49.4 in June, down from 51.0 in the previous month and pointing to
Patrick Chovanec on Bloomberg with a dour message about China’s slowdown. Video streaming by Ustream
China released its official PMI yesterday and the result was not so great. The headline number showed continued expansion at 50.2, down 0.2 on the month, a decelerating decline. However the internals are not so good with real weakness in new orders, especially exports. There is some encouragement in the slowing but the trend in the
Courtesy of Also Sprach Analyst. Most of the time, my main focus of Chinese monetary statistics is on the the money supply, deposits and loans data in Chinese yuan terms. What I have overlooked is a recent sharp increase in the foreign currencies deposits. The People’s Bank of China’s data show that foreign currencies deposits have been rising
China reported its monthly industrial profits this morning and data continues to underwhelm with profits down 2.14 versus a consensus of – 1.6%. Not healthy and an unhappy trend.
Courtesy of Also Sprach Analyst. Recently, the Chinese yuan has stopped strengthening against the US dollar. Indeed, it has been weakening, as I predicted it would. What’s interesting when we look at the prices for USDCNY at daily closing and the People’s Bank of China daily fixing is that, increasingly, the Chinese yuan is closing at rates
Courtesy of Also Sprach Analyst. Interesting research from Standard Chartered shows that corporate China is short the US dollar. That may seem surprising, but it makes sense if the Chinese yuan is expected to go up while the US dollar is expected to go down, which has been the case for the best part of the last
Courtesy of Also Sprach Analyst. While country A’s import from country B should be equal to the export from country B to country A, statistics from different countries do not always match up. That is understandable as there are differences in how things are counted. In the China case, the difference itself is not what interests me
The Conference Board Leading Indicators for China were out today and the news is a rising trend. There is also this from the good news media: China’s trade ministry sought to dispel worries about slowing economic growth on Tuesday by saying exports are likely to pick up in coming months and the country can meet its
Find below a video from The Economist of Jin Liqun, the Chairman of the Board of Supervisors for the China Investment Corporation, a.k.a. the sovereign wealth fund of China, who argues that China is not interested in buying into European bonds because Europeans without good returns or structural adjustment. However, he does say he’s happy to capture quality European management. He also
Courtesy of Also Sprach Analyst. Since late last month, we have seen more obvious signs that the Chinese government has started to reflate the economy both in the language of officials and in what the government is doing. We are probably now seeing more signs. Last month around this time, I noted that the big four banks had
China’s HSBC Flash PMI for June is out has fallen to a seven month low, down 0.3 to 48.1. The internals are actually worse with output falls slowing but leading indicators weakening further: This is not a great report and rightly neither the ASX nor dollar enjoyed it. China
Exclusively from Michael Pettis’ newsletter. Premier Wen’s recent attack on the Chinese banking system last month has highlighted what was already a very interesting debate on Chinese banks and the Chinese financial system. There is a growing sense that the Chinese banking system is deeply flawed and needs to be reformed. But why should China reform
Courtesy of Also Sprach Analyst. China’s M2 money supply has doubled since the collapse of Lehman Brothers. M2 money supply currently stands at around RMB90 trillion, and it was at about RMB45 trillion the month before Lehman collapsed. Thus the so-called RMB4 trillion stimulus after Lehman’s collapse (which is more like a RMB8 trillion fiscal
Late last month, UBS fixed-income research told investors that Renhe Commercial (1387.HK), a commercial real estate developer in China, has not sold a thing for the year so far, thus recommending investors to sell their debt: Our meeting with the company indicated that Renhe had yet sold any operating rights YTD. This, in our opinion, could be attributable
See above today’s May China property price data from the National Bureau of Statistics. The number of cities registering price falls on a yearly basis increased but on a monthly basis increases rose in all three dwelling categories. It’s clear that, for the time being at least, price falls are moderating (at least on this
Courtesy of Also Sprach Analyst. Yesterday I noted how the change in government policies in China’s realty market belied its rhetoric of rebalancing. Even though the Chinese government has been telling everyone for some time that that they are serious in trying to curb home prices, it is now becoming clear that they are now giving up
Courtesy of Also Sprach Analyst. Now that it is clear that the Chinese economy is slowing rapidly, there is more and more evidence that the Chinese central government has given up on the project to rebalance the economy. Even though they say real estate market curbs will continue, and that local government debts will be
Over the long weekend, China dumped a huge amount of macro data for May. The upshot is that the economy continues to slow but at more shallow rate than April. Stimulus is already having some effect and the chances of more has declined. We begin with the news that China’s CPI inflation continued with its
Courtesy of Also Spracht Analyst. The People’s Bank of China has just announced that they would cut interest rates on both 1-year deposits and lending side by 25 basis points: The latest benchmark 1-year deposit rate will be at 3.25% after the cut, while the benchmark 1-year lending rate will be at 6.31% after the
Courtesy of Also Spracht Analyst. Yesterday I talked about the pick-up in lending in the final week of May in the big four Chinese banks, which is a usual occurrence in China. Today, we are hearing the numbers for all banks and the number is much higher than expectations. Sina is reporting that new loans from all
