China: External sector outperforms when production and property market cool
The real economy followed the trend in April, weakening slightly but steadily, at least for the production side. Caixin Manufacturing PMI went below the boom-bust line of 50 for the first time since June 2016. Electricity production, which has been a good measurement of factories’ production level, recorded the weakest growth since mid-2016 but the services sector is holding up.
China’s property market’s bull cycle has seemingly paused after rounds of cooling measures as average price of top cities dropped on a monthly basis, for the first time since early 2015. Properties in Beijing cooled down, while situation in lower-tier cities certainly looked better but still was dragged by the deteriorated sentiment. However, we do not think property prices are going to plummet and expect a similar episode to that of 2014, based on the belief that the property sector is vital for the government to keep its growth target.
Things were more optimistic on the external front. Continuing the relatively strong trend in 2017, exports and imports strengthened slightly in May (8.7% and 14.8% YoY) along with trade balance (US$40.81 billion). Moreover, the rebound of the RMB in late May has rendered support for FX reserves to recover for the 5th consecutive month and further alleviated pressure on capital outflows.
The path forward is not easy for the economy. Concerns over rapidly increasing interest rates (short-end in particular) and credit risks have lingered and the real economy certainly is taking the baton. But what is more worrying is that the PBoC has already pumped more than 660bn through Open Market Operations and targeted lending in Q2 but so far that has failed to bring interest rates down.
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7 年Thanks for the update ！Doug, Ito City, Shizuoka, Japan. 072317.H29年.JST.
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7 年Huge Bucks have been unstoppably leaking out Mainland China. PRC is getting into a Internal Consumption/Spending dependent. An Economic Downturn seems unavoidable soon if I'm not wrong. The blooming/Stability of House Price is too vital to the well being of the ruling Party but it seems that PRC Treasury Department is all thumb all feet/rigid in implementing an adequate and sustainable/reasonable MEASURE in Real Estate Issue :-)
创办人40 年大数据人工智能自动绳神经网络在中国及国际大型及国企金融银行供应链优化改革创新投资技术创新策略培训应用， 于货币预算经贸资本市场结构改革及再生能源生物科技供应链优化5G创新防范资产债务泡沫破灭病毒造成景气衰退危机
7 年China economic growth are different from all other singe handed monetary policy GDP growth model. They are combining single handed structural monetary policy provide rate cut to rural area, and small cap loan, integrated to State Department deep structural SOE< SME< banking, finance, capital market reform and 7 emerging new industries high valued added industries, like telecommunication solar panel, wind energy, biomaterial, high speed train.and structural fiscal policy export tax cut and import tax cuts and consumption tax cuts to boost consumer spending in maintaining retail sales above 10.5 % China excessive rely on real estate housing market investment by 50 %increase in new loan 2016, to support 6.7 % GDP and 1Q this years 6.9 % led overheated asset debt bubble, led China PBOC credit tightening housing prices, loan control financial market risk control, liquidity, deleveraging. Export rebound and record trade surplus led strong GDP rebound support real estate investment weakness..