Posts Tagged ‘China Economy’
China’s trade balance points to inflation
Thursday, January 21st, 2010
The Customs Administration announced record trade flows in and out of China in December. Specifically, exports grew at a 17.7% annual pace, while imports surged 55.9% over the year. This is a remarkable one-month rebound; reported export growth beat consensus expectations by a factor of 3.5 (+ 5% export growth and + 32.5% import growth, according to Bloomberg).
China is experiencing robust domestic demand growth, as illustrated by the surge in imports. Furthermore, there is likely significant price pressure built into this report since the data are measured in nominal $USD. The December trade report suggests that inflation pressures are underway in China’s economy; expect a big jump in coming inflation reports.
I wouldn’t be surprised if the government allows the yuan to appreciate sooner, rather than later, in light of this report.
Rebecca Wilder
Tags: Bloomberg, China, China Economy, China S Economy, China Trade, Consensus Expectations, Customs Administration, Emerging Markets, Import Growth, Inflation Pressures, Inflation Reports, Pace, Rebecca, Rebound, Report Suggests That, Trade Balance, Yuan
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Roundup: The Economy and Bond Market
Sunday, January 17th, 2010
The Economy and Bond Market Treasury yields rallied as this week’s 10 and 30-year auctions received a good response and concerns of global stimulus removal have highlighted risks in the global recovery story. Economic data was mixed this week as December retail sales were surprisingly weak and seemed to contradict earlier data. On the other hand, industrial production rose for the sixth straight month and is giving a classic sign of economic recovery. The chart below graphs industrial production on a year-over-year basis and makes clear the change in direction of activity. 
Strengths
- Industrial production rose 0.6 percent in December and has now risen for six months in a row.
- Chinese imports and exports moved sharply higher in December, which implies continued improvement in not only China’s economy but the global economy.
- Consumer prices in December remained muted, rising only 0.1 percent and giving the Fed plenty of room for monetary policy flexibility.
Weaknesses
- Retail sales for December disappointed and appeared to contradict earlier data. One positive caveat was November data was revised higher making the numbers a little more palatable.
- The Obama administration is proposing a tax on big banks as a way to recoup the government’s support. The concern is that this appears somewhat punitive and more taxes and/or regulation are not an effective way to stimulate the economy.
- The Fed’s beige book reported only a modest improvement in the economy around year end, and cited weakness in real estate and labor markets.
Opportunities
- Expectations continue to build for growth in the U.S. in the current quarter, possibly as much as 4-5 percent. The global economic recovery appears to be taking hold.
Threats
- The U.S. is facing a long-term risk as Fitch cited the budget deficit as a threat to the U.S. AAA debt rating.
Tags: Beige Book, Bond Market, Budget Deficit, Caveat, Change In Direction, China, China Economy, China S Economy, Chinese Imports, Economic Data, Economic Recovery, Emerging Markets, Global Economy, Global Recovery, Imports And Exports, Labor Markets, Monetary Policy, Plenty Of Room, Retail Sales, Stimulus, Treasury Yields, Year End
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China’s trade balance points to inflation
Friday, January 15th, 2010
The Customs Administration announced record trade flows in and out of China in December. Specifically, exports grew at a 17.7% annual pace, while imports surged 55.9% over the year. This is a remarkable one-month rebound; reported export growth beat consensus expectations by a factor of 3.5 (+ 5% export growth and + 32.5% import growth, according to Bloomberg).
China is experiencing robust domestic demand growth, as illustrated by the surge in imports. Furthermore, there is likely significant price pressure built into this report since the data are measured in nominal $USD. The December trade report suggests that inflation pressures are underway in China’s economy; expect a big jump in coming inflation reports.
I wouldn’t be surprised if the government allows the yuan to appreciate sooner, rather than later, in light of this report.
Rebecca Wilder
Tags: Bloomberg, China, China Economy, China S Economy, China Trade, Consensus Expectations, Customs Administration, Emerging Markets, Import Growth, Inflation Pressures, Inflation Reports, Pace, Rebecca, Rebound, Report Suggests That, Trade Balance, Yuan
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China’s Empty City
Monday, November 16th, 2009
China’s economy is continuing to grow despite the global recession, helped by a massive government stimulus package of $585 billion. But doubts remain whether such strong growth can be sustained by public spending alone. Al Jazeera’s Melissa Chan reports from Inner Mongolia, where a whole town built with government money is standing empty.
Source: YouTube, November 10, 2009.
Tags: Al Jazeera, China, China Economy, China S Economy, Doubts, Emerging Markets, Global Recession, Government Money, Inner Mongolia, Massive Government, Melissa Chan, Public Spending, Stimulus Package
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Niall Ferguson: US on a Collision Course with China
Tuesday, October 20th, 2009
Excellent interview with Niall Ferguson on Yahoo Tech Ticker this week.
Niall Ferguson, Part 1:
“People have predicted the end of America in the past and been wrong,” Ferguson concedes. “But let’s face it: If you’re trying to borrow $9 trillion to save your financial system…and already half your public debt held by foreigners, it’s not really the conduct of rising empires, is it?”
Niall Ferguson, Part 2
Ferguson dismisses the dollar loyalists, citing the British pound – the last international reserve currency - as his example. “These things don’t last forever” but don’t expect it to happen overnight. “It’s a long multi-decade process,” he states…
Niall Ferguson, Part 3
“People have predicted the end of America in the past and been wrong,” Ferguson concedes. “But let’s face it: If you’re trying to borrow $9 trillion to save your financial system…and already half your public debt held by foreigners, it’s not really the conduct of rising empires, is it?”
…
“When China’s economy is equal in size to that of the U.S., which could come as early as 2027…it means China becomes not only a major economic competitor - it’s that already, it then becomes a diplomatic competitor and a military competitor,” the history professor declares.
Tags: British Pound, China, China Economy, China S Economy, Collision Course, Decade, Dollar, Economic Competitor, Emerging Markets, Foreigners, History Professor, Loyalists, Niall Ferguson, People, Public Debt, Reserve Currency, Ticker, Trillion, Yahoo, Yahoo Tech
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Jim Rogers Outlook - Inflation, China, and the US
Monday, October 5th, 2009
Jim Rogers visited CNBC last week in Singapore (where he lives) to discuss his outlook on global markets.
Click play to view:
Among other things, Rogers discussed the notion that the US is prone to hyperinflation, as in the 1970s, as a result of its money printing operations. Rogers also said the US has been lying about inflation, that the actual rate of inflation in the US is around 6-7% currently. He added that it would be nice to know where the government shops, because we all know the price of things has been doing nothing but going up.
Rogers also pointed out the best places in the world to invest are countries which are rich in agriculture and natural resources and added that he is not currently buying the shares of any companies in Asia as most markets are up around 100% year-over-year such as China and Sri Lanka.
He added also that America is debasing its currency at a terribly rapid rate and this is never good in the medium to long term - sometimes it helps in the short term - but longer term he’s pessimistic about the fate of the US dollar.
Here are some of the earlier clips from Roger’s visit the same day:
-Advertisement-
8:10 am - How Best to Play China - With China’s pace of growth set to surpass that of the developed world, Kirk West, MD of Principal Global Investors & Jim Rogers, chairman of Rogers Holdings reveal how they capitalizing on this.
8:20 am- China Boosted by Stimulus - Stimulus measures are working on China’s domestic economy, says Kirk West, managing director, at Principal Global Investors. He speaks to Jim Rogers, chairman of Rogers Holdings.
8:30 am - China will Float Yuan - China is freeing their currency more and more each quarter, and this is a sign that a free-float of the yuan is not far, Jim Rogers, chairman of Rogers Holdings tells Thomas Harr, senior FX strategist at Standard Chartered Bank.
Tags: Best Places In The World, China, China Economy, Cnbc, Cnbc Asia, Domestic Economy, ETF, Free Float, Global Markets, Harr, Hyperinflation, Inflation Rate, Jim Rogers, Managing Director, Money Printing, Places In The World, Principal Global Investors, Printing Operations, Rapid Rate, Rate Of Inflation, Standard Chartered Bank, Stimulus, Strategist, Yuan China
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Mobius, Rogers, and IMF Love China
Thursday, October 1st, 2009
China is getting a great deal of attention upon its 60th anniversary. This is great news for the Canadian economy and investors in Canada’s well-positioned market. Bloomberg reports today that the IMF has raised its 2010 GDP growth forecast for China to 9%. It also trimmed its forecast for India by 0.1% to 6.4% from 6.5% which is still very good, given that India has not embarked on as bold a spending strategy. The two are altogether different though. China is an economy now more equitably balanced between its exports sector and domestic spending, with domestic spending taking a near 60% share of the economy, versus 60% exports just ten years ago. India’s GDP consists of 85% domestic spending and has been far better insulated economically from the credit crisis, that the Indian parliament was not forced into providing a massive stimulus as India’s economy was not as vulnerable to a downturn in exports as China’s was. The silver lining here is that China’s bold 4-trillion Yuan (US$ 586-billion) stimulus may successfully transform China into a formidable domestically biased economy, well ahead of original expectations, from once being held as export dependent or vulnerable to export shocks.
As the year progresses though, India’s GDP forecast may get upgraded again on increased spending plans. During the course of the last year, India has begun a new political cycle, and its incumbent Congress party won a mandate in the election earlier this year. In the midst of the credit crisis in the spring, and in the midst of campaigning, India’s spending plans were criticized as being somewhat anemic as compared to China’s. In hindsight, it would have been political suicide if the incumbent party had embarked on bold stimulus initiatives when so many were fearful of the credit crisis. Don’t ignore India at China’s expense. On this basis, its very likely that the Indian government will step up spending, though on a gradual basis over the coming year, which could push growth forecasts higher for 2010. It is notable that India has a sound fiscal position and a nice and clean banking system, and a strong tradition of high savings rates.
Investors looking at investing in emerging markets should consider positions in both India and China, rather than one or the other. These are the only two economies in the world that have sustained their records of growth throughout the current crisis.
Either way, if you choose not to invest directly in India and China, this is good news for the commodities complex, and its good news for Canadian investors taking exposure in the commodities sector.
Mark Mobius says China is his top pick among the emerging markets:
Jim Rogers says he likes China for the next 60 years:
HSBC CEO, Sandy Flockhart says China is the strategically the most important market to HSBC:
Tags: 60th Anniversary, Canada, Canadian Economy, Ceo, China, China China, China Economy, China Mark, Commodities, Congress Party, Credit Crisis, Domestic Spending, Downturn, Emerging Markets, Gdp Forecast, GDP Growth, Great News, Hindsight, Imf, Incumbent Party, India, India Economy, India S Economy, Indian Government, Indian Parliament, Jim Rogers, Love, Mark Mobius, Mobius, Political Suicide, Sandy, Silver Lining, Stimulus
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China Oversold?
Wednesday, April 2nd, 2008
Apr. 2, 2008 - Courtesy: Bespoke Investment Group - The Baltic Dry Index measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea. Many look to the Baltic Dry Index as a leading indicator, and in recent years, its move has been fairly correlated with China’s economy and the Shanghai Composite.
As shown in the chart below, China’s equity market and the Baltic Dry Index had huge rallies from the end of 2005 to the end of 2007. They also had huge declines after they peaked late last year. Since late January, however, the Baltic Dry Index has been climbing while China’s Shanghai Composite has been falling. This divergence suggests that China’s equity markets might be getting a little overdone on the downside at least in the short term.
Tags: Baltic Dry Index, Chart, China, China Economy, China Market, China S Economy, Declines, Divergence, Downside, Economy, Equity Market, Fossil Fuels, Grain, Grains, Index Measures, Investment, Investment Group, Leading Indicator, Markets, Metals, Rallies, Raw Materials, Shanghai Composite
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Rx for China: US Recession
Saturday, January 5th, 2008
Finally, The Economist has published a story, An Old Chinese Myth, which confirms the decoupling of Asia ex-Japan is actually real. A recession in the US is welcome in China, as it will help to moderate China’s growth at the margins, something that its macro-economic policy has not had much success in doing. In any event the article is a good read, and if you are investing in China, this is welcome news for you too.
An American downturn will cause China’s economy to slow. But the likely impact is hugely exaggerated by the headline figures of exports as a share of GDP. Dragonomics forecasts that in 2008 the contribution of net exports to China’s growth will shrink by half. If the impact on investment is also included, GDP growth will slow to about 10% from 11.5% in 2007. This is hardly catastrophic. Indeed, given Beijing’s worries about the economy overheating, it would be welcome.
The American government frequently accuses China of relying excessively on exports. But David Carbon, an economist at DBS, a Singaporean bank, suggests that America is starting to look like the pot that called the kettle black. In the year to September, net exports accounted for more than 30% of America’s total GDP growth in 2007. Another popular belief looks ripe for reappraisal: it seems that domestic demand is a bigger driver of China’s growth than it is of America’s.
With China’s true export-to-GDP ratio at under 10%, and NOT as high as the Headline exports-to-GDP ratio of 37%, a US slowdown would perhaps have the impact of an interest rate hike on the Chinese economy. This may just what the doctor ordered in China’s case.
Tags: American Government, Asia, Beijing, China, China Economy, China S Economy, Chinese Economy, Chinese Myth, Decoupling, Downturn, economic policy, Economist, Economy, Emerging Markets, GDP, GDP Growth, Gdp Ratio, Interest Rate Hike, Investing In China, Investment, Japan, Margins, Popular Belief, Recession, Singapore, Slowdown, Us Slowdown, Welcome News
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