Our proprietary survey results underscore Alibaba’s dominance of China’s e-commerce sector, but also point to growing competition and potential risks to its outlook.

Headline macro-economic data for August fell sharply, but a closer reading of the numbers suggests that worse may be to come, with the full impact of weak credit growth on the real estate sector yet to be felt. 

Chinese banking authorities have issued new rules to curb the artificial inflation of deposits at the end of each month or quarter. The new regulations could significantly reduce banks’ exposure to shadow finance, likely squeezing their finances and lending capacity. However, we are unsure how effectively the new regulations will be enforced.

Credit growth rebounded in August from very low levels in July, with the sum of total social financing (TSF) – the widest official measure of financing in the economy – and our estimate of underground lending rising to Rmb1,199.7bn in August, up 150% MoM. However, credit growth remained down 34% YoY. 

Although home sales in the 42 cities monitored by China Confidential saw a seasonal uptick in the first week of September, YoY growth remained negative.

Huishan Dairy has grown rapidly, supported by heavy advertising and quality control advantages, and we expect growth to remain strong, though investment plans and competition may weigh on margins in the short term.

Leading dairy producer Yili faces growing competition from domestic and international rivals, particularly in the premium segment, as illustrated by falling popularity in our survey. However, improving product mix and rising margins offer reasons for optimism.

China’s largest dairy farm operator by herd size has benefitted from recent supply disruptions to grow rapidly on advantages in terms of technology and scale.