miw

17 May 2012, 12:38 PM

Been thinking about what the Chinese might do about this slowdown, and have come to the conclusion that they will do nothing much for the time being. Back in 2008/9, the thing that triggered the massive stimulus response was a huge wave of factory closures in the manufacturing provinces and 20 million unemployed. So far there's no sign of this this time. In fact, Q1 numbers are still showing a labor shortage and wage inflation.

While Chinese people are not losing their jobs there will be no action. They certanly are not going to be trying to pump out a higher growth number for Australia's benefit. If 5% growth works, I imagine they will be happy with 5%. (Not that I think 5% will work. There is still too much growth skew from east t west.) If it drives down commodity prices then so much the better.

Of course, unemployment is a lagging indicator so that may still be in the future.

Quote:

 

China's rapid growth may be exaggerated

AAP
June 30, 2012 10:45AM

It's getting hard even for the bulls to pretend something isn't off about China's breakneck growth story.

ON the one hand, as everyone knows, China's GDP is said to have expanded by an incredible average 10 per cent per year for 30 years, according to the IMF, bringing millions of people out of poverty, and making it the second largest economy in the world behind the US.

On the other hand, much of this growth has been fuelled by investment - in innumerable highways, airports, apartment complexes, and trains - so much so that some experts say China's economy is not only imbalanced, but may actually be smaller than previously thought, due to waste and environmental destruction.

In fact, according to a new "Inclusive Wealth" index revealed by the United Nations at the Rio+20 conference this week, by some measures China's economy still trails Japan as the third largest in the world.

The UN's metric weighs economic growth against other factors, including environmental resources, and the value of "manufactured, human and natural capital stocks."

The top economy in the "Inclusive Wealth Index" is the US with $US118 trillion ($A117.90 trillion) in total wealth, followed by Japan with $55 trillion. Germany ranks nearly the same as China, with $20 trillion.

Read more: http://www.news.com.au/money/chinas-rapid-growth-may-be-exaggerated/story-e6frfmci-1226412955272#ixzz1zKMAqX4j

newjez

2 Jul 2012, 05:07 AM

Bit of a surprise here

I am assuming that is the govts PMI and not HSBC which oftens comes out lower.

Quote:

 

China's Land Market Shows Signs of Warming

By ESTHER FUNG

China's land market is showing signs of activity as developers regain an appetite for buying after sitting on the sidelines since late last year.

Over the last two months, as sales in the property market have climbed and inventories dropped, better-financed developers have been replenishing their land banks, though the pace of land sales is far below average historical levels.

Longfor Properties Co. (0960.HK), Agile Property Holdings Ltd. (3383.HK) and Evergrande Real Estate Group Ltd. (3333.HK) have all made sizable land purchases, after their housing sales improved in recent months.

Guangzhou-based Agile last week said it has acquired a 70% stake in a commercial and residential project in Xian, Shaanxi Province, for 560 million yuan ($88.1 million). It also bought land on the southern island of Hainan in March, in southwestern Chongqing in May, and in Zhengzhou in central China in June. Before that, its last major land purchase was in Hainan in late April 2011.

Evergrande, also based in Guangzhou, bought a site in that city's central business district for CNY1.32 billion in June--a local record, and almost double the price-per-square meter paid by a competitor in the same district in 2011, media reports said.

Beijing-based Longfor last week said it has acquired three land plots in Xiamen in southeastern Fujian Province for CNY1.74 billion.

"Having land banks in different regions will help the firm hedge against risks during times of market volatility," Longfor said on its website. It also said it wants to create a nationwide brand.

"We will continue to look for opportunities in the region while still maintaining a prudent fiscal position," it said.

Analysts said this diversification strategy makes sense.

"These land acquisitions highlight developers' efforts to diversify their operations to lower their exposure to any single region or business segment. They are doing so in the wake of last year's market slowdown brought on by local governments' tighter restrictions on home purchases," Kaven Tsang, an analyst at credit-ratings firm Moody's Investors Service, said in a research note.

The central authorities, under a two-year campaign to cool the property market, have raised down-payment requirements, banned purchases of second and third homes in some parts of the country, and tightened credit to developers. This has cut into real estate sales and in turn hurt demand for land from property developers.

This has translated into a sharp drop in revenue from land sales, a major source of income for local governments. Land transfer revenue in the first half of 2012 declined 38% from the same period a year earlier to CNY652.6 billion, showed data from China Index Academy, a property research organization.

Some analysts caution that recent land purchases aren't an indication of buyers being on the verge of pouring into the market.

"Land prices are now around 34% lower than their peak levels of 2010, but only a small portion of developers with low inventories and low gearing are wading back into the land market," said Johnson Hu, an analyst at CIMB Securities. He said the land market will probably show a more substantial pick up at the end of the third quarter, when inventory levels decline more.

Other developers are still facing liquidity shortages and are unwilling to participate in land auctions. Hangzhou-based Greentown China Holdings Ltd. (3900.HK) and Shanghai-based SPG Land Holdings Ltd. (0337.HK) have recently sold prime assets to rivals to repay debt.

Write to Esther Fung at esther.fung@dowjones.com

Quote:

 

China Central Bank Floods Money Market

By SHEN HONG

SHANGHAI—China's central bank has flooded the local money market with cash in recent days, stoking expectations that it may be signaling a broader monetary easing, just as it did two months ago.

Since last week, the People's Bank of China has ramped up its use of reverse-repurchase operations, an increasingly important tool for pumping short-term liquidity into the banking system. It did something similar in May, shortly before it cut banks' reserve requirements, freeing up huge amounts of cash that banks could lend out to boost the slowing economy.

The stepped-up use of reverse repos coincides with further signs of economic weakness in the world's second-biggest economy and growing calls for the PBOC to cut reserve-requirement ratios for the fourth time since November.

The central bank injected 143 billion yuan ($22.5 billion) into the market Tuesday, its largest such offering in nearly six months. This follows 125 billion yuan of injections, via two reverse-repo offerings, last week. The moves have pushed the weighted average rate of interbank seven-day repo, a benchmark gauge of short-term funding costs, down to 3.87% late Wednesday from as high as 4.00% last week.

"The latest massive reverse-repo offerings suggested that the central bank may want the interbank seven-day repo rate to be below 3% to facilitate corporate financing," said bond analyst Adam Chen at Hongyuan Securities. "But I think the central bank will cut the banks' reserve requirement ratio again in the near term to help achieve the goal."

The PBOC did just that in the two weeks before its last reserve-ratio cut, in May.

The latest cash injections came after data this week showed China's manufacturing slowed last month to its slowest since November. The economy grew 8.1% in the first quarter from a year earlier, the weakest in three years.

The state-run China Securities Journal said in a front-page commentary Tuesday that the time has come for the PBOC to cut the reserve-requirement ratio again to prevent economic growth from slowing further. The newspaper said a cut would not only inject cash into the market and spur credit demand, it would also benefit debt financing and financial-market reform.

Some market participants think the PBOC could ease again as soon as this week.

Reverse repos have emerged this year as a popular tool for the PBOC to quench a periodic thirst for liquidity in the interbank market, due either to slow bank lending or seasonal liquidity crunches. In a reverse-repo transaction, the central bank pumps short-term cash into the market by buying government bonds from a primary dealer, who agrees to buy them back within a short period.

Since beginning open-market operations in 1996, the PBOC has mostly sought to drain liquidity—by selling central-bank bills and repos—in times of high inflation and tight monetary policy. But this year, with growth slumping and capital inflows ebbing as expectations for further yuan appreciation diminish, the bank has turned to reverse repos.

It offered reverse repos to all 49 primary dealers seven times in the first half, pumping in 661 billion yuan and exceeding all its previous such injections combined.

Using market operations like reverse repos is more flexible than the blunt instrument of interest-rate cuts, although—unlike reserve-requirement cuts—reverse repos boost liquidity for only short periods. China's policy makers are reluctant to cut the reserve requirements or interest rates too frequently, as such moves could lead to renewed inflationary pressures in the country.
—Wang Ming

Write to Shen Hong at hong.shen@dowjones.com

miw

5 Jul 2012, 01:00 PM

From the WSJ:

peter fraser

5 Jul 2012, 03:47 PM

There is an article over at MB from also spracht that covers the sudden increase in real estate sales - nice graph.

http://www.macrobusiness.com.au/2012/07/chinas-realty-sales-rocket/

Sales have really taken off over a very short time frame. Is the demand that strong?

miw

5 Jul 2012, 07:45 PM

peter fraser

5 Jul 2012, 03:47 PM

There is an article over at MB from also spracht that covers the sudden increase in real estate sales - nice graph.

http://www.macrobusiness.com.au/2012/07/chinas-realty-sales-rocket/

Sales have really taken off over a very short time frame. Is the demand that strong?

I seem to remember following up in mid-June and according to what I could find, there was a huge spike in May which cooled off in June. I'll have another search and see what it's doing now.

I do know that the May spike was not accompanied by any increase in prices. It probably had more to do with a lot of people who had been approved finance actually being able to get it. Before that, you could be approved finance but still not able to get a loan because the banks had no money to lend.

peter fraser

5 Jul 2012, 07:55 PM

Prior to the modernised banking system that we now have courtesy of Keating, banks and building societies regularly approved loans, but then couldn't fund them. Building societies were particularly bad and buyers might have to wait 3 months to get the funding that they had approved.

peter fraser

5 Jul 2012, 07:55 PM

Prior to the modernised banking system that we now have courtesy of Keating, banks and building societies regularly approved loans, but then couldn't fund them. Building societies were particularly bad and buyers might have to wait 3 months to get the funding that they had approved.