Steel production has hit record highs at the beginning of this year, but while demand has lagged, underlying fundamentals remain strong.
Fixed Asset Investment
Capital intensive China has struggled this year, but we believe that it will fare better in 2013
China Confidential has identified 10 durable, long-term trends and 10 potential danger-spots for the Chinese economy in 2013 and beyond
China has a long way to go in terms of housing and infrastructure provision, suggesting that investment still has an important part to play in the economy.
China’s headline macroeconomic data in October provided further evidence of the gentle rebound in growth that our indicators and on-the-ground investigations have suggested over the past month. With inflation continuing to moderate, we expect the rebound to deliver faster YoY GDP growth in 4Q12 than the 7.4% YoY GDP growth recorded in 3Q12, bringing full-year GDP growth to around 7.7%-7.8%.
Grassroots evidence in seven provinces shows that China’s fixed asset investment engines are starting to rev up.
Mounting evidence shows a gentle rebound in October growth.
Despite unveiling ambitious Rmb17tn investment plans in recent months, a shortfall in income from land sales and bank loans means that local governments lack the funding to support another 2009-style jump in local investments.
Developers have increased land purchases and construction activity in recent weeks, reflecting a renewed focus on rising demand from first-time buyers.
An upturn in housing construction offers hope that economic activity is stabilising, but geopolitical turbulence is clouding China's near-term outlook.
Renminbi Compass, a new research service launched by the FT, aims to act as a navigational guide through the expanding universe of renminbi asset classes. With the Chinese currency gaining ever-wider acceptance around the world and Beijing taking steps to open its capital account, we are broadening our research coverage to include not only equity funds but also all other important renminbi asset classes, such as chengtou bonds, dim sum bonds, real estate, trust products, underground banking, art, antiques and several others.