China Economy

0

US earnings trace slowing China

Several bell weather US firms have reported earnings that provide an insight into the state of the Chinese economy. ABB (ABBN.VX) and Caterpillar (CAT.N) both blamed shifts in their accounts on slack Chinese demand. To start with, ABB’s bottom-line beat expectations but margins declined.  The company’s presentation said that a “Weaker China offset by good growth in N America”. 

2

China Flash PMI improves a bit

The China Flash PMI is out and shows a small improvement from 48.3 in March to 49.1 in April. Ouput, new orders and exports all contracted at a slower rate: This is welcome. However, a quick look at the charts shows that the trends are all solidly sideways: The global zombie plods on! China Flash

0

China’s April lending weak?

Caijing reports that sources close to the big 4 Chinese Banks (ICBC, Bank of China, China Construction Bank, and Agricultural Bank of China) suggested that the 4 banks have lost more than RMB1 trillion of deposits, while new loans are not really growing. The hugely positive picture of above expectation new loans in March appears to be

7

Nomura joins commodity super cycle bears

Various investment banks have been weighing in on whether or not the end of the commodity/ steel/ metal and other super-cycles, which have been led primarily by China’s increasing demand. Credit Suisse has different teams on either side of the debate, and Citi thinks that it’s over.  Now it is Nomura’s turn. Similar to Citi’s argument,

27

China’s Achilles Heel

By Leith van Onselen The Economist today published an interesting article about the demographic time bomb that threatens to derail China’s economic development: Over the past 30 years, China’s total fertility rate—the number of children a woman can expect to have during her lifetime—has fallen from 2.6, well above the rate needed to hold a

56

An illustration of China’s unsustainable growth

The corruption and purging of Bo Xilai is illustrative of the shortcomings of China’s unsustainable growth model. After Bo Xilai was purged and as new people will be running the Chongqing government, a review of the debts outstanding for the government, including the local government financing vehicles, which are used in funding many of the infrastructure projects,

26

Folks flee the ghost city

Remember Ordos, the ghost city? Thanks to its coal, the place was “booming” (sort of).  Not only was it a bizarre place with a real estate “bubble” (actually, I can’t quite want to find a word to describe something which is more than a bubble) even though the place is seriously over-housed, it was also a

0

China widens yuan trading

The People’s Bank of China has announced that is will allow more flexibility in both ways for Chinese yuan exchange rate.  From 16 April (Monday) onwards, the trading band limit for USDCNY will be increased from ±0.5% away from the daily fixing to ±1% away from the daily fixing. Increasing flexibility of the exchange has been

3

A decelerating Dragon

More analysis on today’s China GDP print, this time from Phat Dragon, who had forecast a 8.2% rise instead of the printed 8.1%, This was much better than most of the commentariat, who have now dismissed their miss (8.4% consensus), focusing on the resignation of Bob Brown, with none (I’ve read all the majors on

0

More on the China GDP miss

As reported earlier, the Chinese National Bureau of Statistics published the latest GDP growth figures (along with many other things that will be mentioned below). The year-on-year GDP grow by 8.1% in real terms, missing estimates of 8.4% growth.  On a quarter-on-quarter basis, GDP grew by 1.8% in real terms (seasonally adjusted, presumably), down from

1

China GDP at 8.1%

Official Chinese statistics have just been released, with real GDP (gross domestic product) for the first quarter, alongside industrial production and retail sales. Here are the quick snapshots: Quarter on quarter GDP rose 1.8%, was expected to rise 1.9% (last quarter was 2%) Year on year GDP rose 8.1%, was expected to rise 8.4% (last

33

12 predictions for China’s coming decade

Exclusively from Michael Pettis most recent newsletter: In the last issue of my newsletter I spoke about the economic constraints that limit China’s political options.  I argued that regardless of what Beijing claimed it wanted to do, its economic choices were largely limited either to maintaining the existing growth model, thereby running the risk of a

1

Chinese credit accelerates in March

The People’s Banks of China has published the latest set of monetary statistics for March 2012. M2 Money supply grew by 13.4% yoy, up from 13.0% yoy in February, accelerating for two consecutive months, and was above market consensus of 13.0%.  M1 money supply growth increased by 4.4% yoy, below consensus. New Chinese yuan loans increased

4

China’s exports, imports weak

From ANZ China’s March trade data: Export growth beat market expectations, gaining 8.9% y/y, down from February’s 18.4%, but above market expectations of 7.0%. Shipments to the US and emerging economies remained upbeat, while exports to the EU recorded a smaller y/y decline. • Import growth surprised on the downside, gaining only 5.3% y/y in March, compared with the last

1

Chinese consumer inflation accelerates

Find below a useful note on yesterday’s from ANZ on yesterday’s Chinese inflation numbers for March which saw the CPI rise 0.2% to 3.6% largely on accelerating food prices. The PPI deflated for the month, down 0.3% to minus 0.3% suggesting ongoing weakness in the China’s industrial economy. ANZ now sees no new monetary easing

1

China links

Courtesy of Sinocism: China Shows U.S. How to Push for Carbon Capture – Bloomberg – in China, carbon capture marches steadfastly ahead, as an article in the May issue of Bloomberg Markets magazine reports. A pilot project by China Huaneng Group Corp. has been able to remove carbon from coal-plant exhaust for about $39 per ton

46

Sinocism blocked in China

From our alliance partner and provider of daily Chinese links comes this news on the actions of our great and powerful northerly friend: Earlier today Hong Huang recommended the site to her 4.3m Sina Weibo followers. Within a few hours Sinocism was blocked by China’s Great Firewall, the first time I have had any content, let alone

6

China’s real choices for growth

  An exclusive excerpt from Michael Pettis’ most recent newsletter: Last week’s news was dominated by the sudden but not wholly unexpected removal of Bo Xilai as mayor of Chongqing. After the initial shock wore off, much of the speculation within China has moved on to what his ousting says about the evolution of power

14

Citi weighs in on commodity super cycle debate

Citi has joined the recent debate about whether the commodity super cycle is finished (or nearly so) with an argument in the affirmative. Bulls like to point to the fact that the apparent intensity of use for steel (in terms of kg per capita) for China is still well below some other countries at their peak. However,

16

China manufacturing disappoints (updated)

The HSBC Flash Manufacturing PMI for March was just released and was disappointing – 48.1 – anything below 50 means contraction. This is the 5th consecutive month of contraction, last month the PMI was flat at 49.7 points. The downtrend is obvious. What is not so obvious is the mechanism behind the slowdown: Importantly, new

11

Australian bulls running through a China shop

At MacroBusiness we have been warning about the Australian policymaker love affair with all things Chinese for some time now. It’s not because we are natural contrarians but rather because we see risks in an over indulgence on any one economic theory or belief, be that overly optimistic (perma-bull) or overly pessimistic (perma-bear). How else did

3

Population and disinflation

In my 2012 forecast for China’s economy, I pointed out that while the consensus seems to suggest that the future for China will be inflationary because of ageing population and shrinking labour force (see also BarCap’s view on this issue, in which they think China will have a structurally high inflation in the years to

15

China housing bubble crackles

Following Phat Dragon this morning comes this news from FT: Home prices in nearly two-thirds of China’s major cities fell in February from the previous month, as measures taken to tame the property market continue to have an impact. Beijing’s National Bureau of Statistics (NBS) said on Sunday that 45 out of 70 large and

0

China records capital inflow in February 2012

The People’s Bank of China recently published the detailed tables to their latest monetary statistics for February 2012. In particular, I want to look at the change in position for forex purchase, a gauge in money flow.  For February, the overall position for FX purchase remained stable, increasing slightly by about RMB25 billion.  Taken into account

35

More signs of a bumpy Chinese landing

So, the many meetings of the leaders of China have came to an end and the Shanghai stock market celebrated by falling 2.6% yesterday. There are a few things wroth noting from the past two days. As mentioned early on, Wen Jiabao has made it clear that GDP growth target for the year would be 7.5% instead

32

Wen says whoa

If you caught my Trading Day piece last night, I explained that after the close of the local market, where the unicorns were prancing in verdant fields, the Chinese share market – the Shanghai Composite (SSEC) plummeted nearly 3%, closing down 2.6% (in comparison with the ASX200 which closed up over 1%). Here’s the intraday

0

Loan demand remains weak in China

As we have repeatedly noted,  loan demand remains weak in China as the economy slows.  As I have discussed before, cutting RRR is not easing (and PBOC’s governor has made the same point already), it should not be a surprise that new loans have disappointed the market for 2 straight months, and it seems that

4

Nomura upgrades China GDP growth

Last year, Nomura said there is 1-in-3 chance for China to experience a hard landing by the end of 2014. For now, however, they are revising their 2012 GDP forecast upward from 7.9% yoy (real) to 8.2% yoy (real): We are revising our 2012 China GDP growth forecast up to 8.2% from 7.9% for three

16

Special: China – rebalancing the economy

For the large part, I think the challenges facing the Chinese economy are simply part of the challenges that the global economy has been confronting. The “imbalances” of the Chinese economy reflect the “imbalances” of the global economy.  China’s massive trade surplus was a result of policy, which, for the most part of more than