Fixed Asset Investment

China’s inflation suggests more liquidity easing

Inflation figures released today extend Beijing's license to ease liquidity policy further in coming weeks (CC Jan 12 Macro View) and further relieves manufacturers from the big margin squeeze that characterised 2011 (CC Jan 12 Consumer China).

Stimulus required

Though a repeat of the muscular Rmb4.0tn stimulus package seen in 2009-2010 is now hardly possible, the need for Beijing to inject extra vigour into consumer spending, exports and even fixed asset investments is slowly becoming clearer.

China's economy, inflation cool - more easing likely

Industrial output and fixed asset investment both slowed significantly in November, and consumer price inflation also dropped sharply. We think the trends, taken together, reinforce the likelihood (CC Nov 17 Macro View) that Beijing will move to boost liquidity in the economy with several further bank reserve requirement reductions and a cut in interest rates. New administrative measures to stimulate economic demand are also likely in coming months.

October numbers show a 2011 soft-landing

Industrial output, retail sales and power production showed a slowing year-on-year trend in October, but the pace of moderation suggests that China is on track to achieve a soft-landing. We reiterate that GDP is most likely to come it at around 9.3% YoY for 2011 (CC Dec 23 2010 Macro View and CC Oct 6 Macro View), posting Q4 GDP YoY of just under 9%.

Property restrictions to ease?

Debate has begun over whether property price cuts will lead to widespread easing of restrictions in the market.

Local government bond pilot scheme announced

China's central government today announced a pilot scheme allowing select cities and regions to issue local government bonds for the first time in 17 years. The move opens the door for local governments to manage their finances more independently. It may also be considered as support for local governments suffering from mounting debts following a spending spree since 2009.

Transport investment stalls

The once-firm bond between state banks and state-owned transport infrastructure builders is fraying, throwing a key motivator of economic growth into doubt.

Greentown case unnerves property investors

Concerns over debt and cash flow levels among property developers are hurting stock prices.

Shopping mall fever may end in tears

A China Confidential survey of shopping malls in six provinces finds significant evidence of overblown ambitions among developers.

Real estate cools

A mix of government restrictions, rising developer credit costs, climbing mortgage payments and slowing property transactions appear set to cool most areas of China’s real estate market.

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09 Feb 2012

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