7/30/2023 0 Comments Cyber shadow live forever![]() And growth in land transactions collapsed to -34% yoy in the first two months this year, from 14% in 2018, so land acquisition fees should follow this sliding trend and drag down overall property investment growth in the coming quarters." "The land transaction amount, which is recorded when land auctions occur, leads the land acquisition fee component of the property investment series, which is only recorded when payments are made, usually in installments. And when things get dicey you pump the brakes gently to ensure the car doesn't slide out of control. Since the roads are slippery, instead of keeping your foot on the accelerator, you keep your foot by the brake. Have you ever driven in a snowstorm?ĭriving in a snowstorm is perilous, but there is a technique to it. So the important question is not how high China can fly on this round of credit - it's how quickly it will fall back to earth. So loose credit conditions like this can't last forever, and there are already obvious signs that segments of the economy will suffer significantly without this extra credit cushion. The government is still afraid of bubbles, especially in housing. ![]() Of course, there is a limit to all of this credit spraying. "The lesson from 2018 is that China's post-global crisis economy and financial sector cannot deleverage without an extremely high cost to growth that the authorities are unwilling to incur." "This effectively reverses all of the gains from 2018's three-quarters of deleveraging (as we have said repeatedly in the past, by our measure zero deleveraging occurred in 2017)," Chu wrote in a recent note to clients. Policymakers just won't be able to help themselves, by her reckoning, and China's closely watched credit-to-gross-domestic-product figure will rise from 281% in 2018 to 288% in 2019. Over at Autonomous Research, Chu posits that growth in credit from shadow-banking activity will turn slightly positive for 2019. "It's also the highest level of shadow bank use since the stimulus-fueled recovery/commodities rally of second quarter 2016." ![]() "Just a few months ago the PBOC was still paying lip service to deleveraging, but our data show this as the second consecutive quarter where shadow banking use expanded as a share of total borrowing," the China Beige Book analysts wrote in a recent report. So it should be no surprise that the China Beige Book credits the "unshackling" of the country's shadow banks for this recent bounceback. You'll recall it was the crackdown on the shadow-banking sector - which at one point made up 40% of all new credit in the country - that prompted last year's agonizing economic slowdown. The firm's credit impulse showed that borrowing in January and February matched all of Q1 in 2018. No sector went untouched, and there was no targeting specific industries or regions.Īutonomous Research also noted the return of shadow banking in China. "To sustain that next year they're going to have to post in nominal terms a record flow of credit." Shadow banking is back, y'allĪccording to the China Beige Book, a private survey of businesses in the country, China's companies borrowed at levels unseen since mid-2013, when credit was booming and the country's shadow-banking sector was expanding. ![]() "Credit has turned, and that means we don't have to put a floor on growth," Autonomous Research's Charlene Chu told Business Insider over the phone. ![]() That credit is buying China less growth than it did in the past, however, showing that the risk will eventually swallow up the rewards. Facing the prospect of a debilitating slowdown, Chinese policymakers eased credit conditions to keep money flowing through the economy. Underlying all the ecstasy is a story that should sound familiar to China watchers. After the print on Sunday night, the Shanghai Composite closed its session up 2.6% and markets in the US and Europe rallied as well.Įnjoy it while it lasts. It often indicates a user profile.Ĭhina's purchasing managers' index rebounded unexpectedly last month, so the market - taking this as a sign that the worst is over in the world's second-largest economy - is rejoicing with a glorious global rally. Account icon An icon in the shape of a person's head and shoulders. ![]()
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