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China

Car Sales in China a Victim of Tightening

In a sign of China’s slowing economy passenger car sales in the country grew at the slowest pace in 15 months, moving off historic highs stoked by the country’s unprecedented fiscal stimulus. As the attached chart highlights, the spike in car sales was highly correlated to strong consumer lending growth catalyzed by the government’s stimulus […]

The IMF’s Delusions of Grandeur for China

As everyone is aware—excluding possibly the IMF— the Chinese government has begun tapping the brakes on the country’s economic engine to prevent overheating and curtail inflationary fears.  With this in mind, the IMF surprised quite a few people yesterday increasing their 2010 growth forecast for China to 10.5% y/y from 10.0% in April; well above […]

China’s Real Estate Free Fall May Not Bode Well For Commodities

China’s plummeting real estate transactions could spell trouble for domestic steel and cement industries.  The average number of real estate transaction in China’s 15 largest cities fell 75% on an annual basis according to the most weekly June release according to Goldman Sachs.  On a ytd basis transactions have declined -29%.  The Chinese government has […]

The Decline in the BDI Doesn’t Mean Much…

The Baltic Dry Index (BDI) has fallen 28% from its recent high on May 26th, indicating to some weakness in the global economy.  The BDI tracks the prices of bulk carriers which are the life-blood of global trade carrying everything from iron ore to grain.  While the 28% decline may seem ominous, the BDI is […]

Chinese Government Officials May Have Leaked Key Economic Data

“Dear all: One Chinese official apparently leaks May macro data According to Reuters, a senior Chinese government official leaked some key macro data during an internal investor conference. If confirmed, it will be one of the largest leakages in China in two years. Official numbers are yet to be released. Relevant numbers are for CPI, […]

Pressure for Chinese Tightening Continues to Build:

As the chart below illustrates, Chinese inflation has risen above levels where over the past five years Chinese authorities reacted with significant hikes in the country’s benchmark deposit rate.  Yet, Chinese authorities may delay a hike, at least for the moment, to measure the effectiveness of targeted policies at the property sector and several increases […]

China’s Tightening Tool Box…

The wheels of tightening may be gaining momentum in China, after February’s higher than anticipated inflation release.  High inflation leading to negative real deposit rates may entice investors to withdraw deposits and invest in more speculative assets, potentially spurring what is arguably already a bubble in the country’s housing sector.  I believe that China has […]

Chinese RMB Appreciation Always Seems Six Months Away (But It’s Coming)…

Since the start of this year I have been a proponent of the belief that China will once again begin to gradually appreciate their currency as exports recover, and inflation begins to creep back into the Chinese economy.  As the chart below illustrates,  investors in the CNY NDF market appear to share this view.  But, […]

China’s Surprises on Timing, But Not Action

Judging by the market’s reaction, investors were blinded sided today when Chinese officials increase their reserve requirement ratio for the second time during its renewed tightening cycle.  But, really the only surprise was that the hike occurred just prior to the Chinese New Year, which is a week long holiday.  I have been stating for […]

Lending Spikes in China, Confidence Falls, & Consumer Prices Remain Tame for Now…

According to the China Securities Journal, Chinese banks lent almost CNY1.4 trn in new loans during January–third-largest monthly total on record. This was less than the CNY1.6 trn some outlets has been speculating on, but far more than what I expect the government would have liked. But, considering that it was reported that CNY1.1 trn […]