Posts Tagged ‘China S 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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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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