It seems that China’s import of commodites might be slowing down during Q1 2010. According to a latest stats analysis, the commodity import slowed down significantly y-o-y in Copper, Continue (继续)
Archive for April, 2010
USA and EU used to be China’s top export destination. Such a trend, however, is being challenged and changed. In 2010 so far, it seems that Asia ex-Japan has become the top Continue (继续)
China’s auto market is the world’s fastest growing market and just recently surpassed USA to become the world’s biggest car market (only slightly behind EU which is not a country). Continue (继续)
Universal Expo, World Fair or the Great Exhibition, whatever name you call it, seems losing its attractiveness to the world audience. However such a pessimistic fate might be turned around thanks to China government. The Shanghai Expo that officially launches in May is likely to be the most eye catching and spectacular Expo in the last one hundred years, promoting people’s interest towards Expo again.
During this week Shanghai expo had a pre-launch but it seems a painful experience to visit the expo, mainly due to the excessive crowds. To visit any hall, be it African, European or Asian, tourists need to queue for at least two hours, and some of the most popular halls are enforced to be closed as they can’t handle so many visitors. Trying to find some food in the expo is next to mission impossible, and one will be charged a hefty premium for a sandwich if he is lucky enough to undergo the long queue after a two hours wait. Continue (继续)
Two cities in Hainan Province of China lead the property boom in 2009 across the nation. The housing price in Haikou and Sanya went up around 60% y-o-y in 2009, Continue (继续)
Since the financial crisis, China’s Insurance companies have been valued at the highest level among the world peers, including Warren Buffet’s Berkshire Hathaway. Continue (继续)
According to a recent study, the Rental Yield of properties in Shanghai and Beijing leads that of Asian peers such as Tokyo, Hongkong and Singapore. Continue (继续)
(1) Money Growth
Monetary growth continues to slow down in March. M2 growth slows down to 22.5% y-o-y, which is 2.5% slower than that of Feb. RMB loan growth slows down to 21.8%, Continue (继续)
China’s GDP growth for Q1 has surprised the market on the upside. According the National Bureau of Statistics, the GDP of Q1 went up by 11.9% y-o-y (Read Article from Market Watch). Continue (继续)
What can happen in one week? Amazingly sometimes what happens in one week is beyond what most people can expect. During this week, the expectation that Renminbi is likely to be ‘soft de-pegged’ from USD and appreciate in the near future suddenly excites the market. To start with, Mr. Benanke, the Fed chairman, expressed the seemingly most strong opinion publicly in front of the Congress on the undervaluation of RMB so far (Read Article from WSJ).
To Quote:
‘I think,….their currency (RMB) is undervalued and has been used to promote a more export oriented economy’. Continue (继续)
China’s CPI increased by 2.4% on a y-o-y basis in March 2010, according to data released by National Bureau of Statistics. In the same month, PPI increased by a more aggressive pace at 5.9%. Continue (继续)
Edward Chancellor is the author of “Devil Take the Hindmost: A History of Financial Speculation” (1999), chosen as a New York Times “Notable Book of the Year,” and ranked as one of six indispensable investment classics by Money magazine. He is also editor of “Capital Account: A Money Manager’s Reports on a Turbulent Decade” (2004), a first-hand account of the speculative mania of the late 1990s and its aftermath.
Edward Chancellor has expressed cautious views on China repeatedly in the last five years. The most recent one is a report that Chancellor wrote for GMO White Paper, called ‘China’s Red Flags’ (Read Report from Scribd). In this excellent report, Chancellor highlighted ten aspects of a typical financial bubble. After comparing the current China to these features, Chancellor concluded that China is showing a sign of bubble in most of the aspects that are representative of a bubble, and as a law of nature, bubbles tend to burst sooner or later. Continue (继续)
Jim O’Neill is head of global economic research at Goldman Sachs. O’neil is best known for his prominent economic thesis regarding the economically related nations referred to as BRICs: Brazil, Russia, India and China. He coined the phrase in a 2001 paper entitle “The World Needs Better Economic BRICs.”
O’Neil is a vocal promoter of ‘China Century’, therefore I think it won’t cause any confusion if we classify O’Neil as a CHINA BULL. According to O’Neil, China is likely to take over USA as the world’s biggest economy by 2027 (Read Article from Korea Times). By then, according to O’Neil, the total economy size of BRIC will surpass that of G7, and the world would have a totally different look in terms of economic order. In addition, Jim O’Neil thinks that the 2008 financial crisis actually is a good opportunity for China and in fact shortened the time for China to catch up with USA. Based on such trend, China is likely to have an equal amount of economic and political influence on the world affair as USA by 2040.
Jim O’neil clearly is much more bullish about China than a lot of Chinese. Whether O’Neil’s brave prediction materializes remains to be seen. While as a Chinese I certainly would be happy to see that day, I remain sober and cautious against the potential fall outs. After all, it is a long time before we talk about 2027, let alone 2040. Two years ago, nobody would have foreseen the financial crisis to hit the industrialized world so hard. However Jim O’neil’s good wish on China makes him one of the remarkable feature in the camp of China Bulls. Continue (继续)
China has been a keen holder of US Treasury since 2001. In the last decade up till 2009, China has been in a steady trend to increase the holdings of US treasury. Continue (继续)
Andy Xie is an independent economist based in Shanghai, and the former Morgan Stanley star chief Asia-Pacific economist. Andy Xie is famous in the investment circle for his contrarian and provocative views. Xie has a strong view that China is in the process of creating one of the biggest bubbles in history, especially in real estate market. According to Xie, the housing price in China has gone too far away from its intrinsic value way beyond the affordability of Average Joe on the street. To make matters worse, Xie doesn’t see central government’s recent effort to curb housing price effective at all. On the contrary, Xie sees the local government ready to unleash another fresh round of property inflation (Read Article from Caixin) in the near future. By the law of economy, bubble is set to burst, by when the economy will be hit hard and people will suffer.
Despite Xie’s seemingly exaggerating view, I sideline with him that the property bubble in China seems in the formation without a single doubt. The question is when the D day would come, or maybe it will never come as the bubble could be ‘grown’ away given the super bullish outlook of China’s growth prospect. In fact, the China ‘growth’ story is the most frequent, and probably the only robust reason that China Bulls cite when they talk about asset prices in China, be it equity or property. After all, China has delivered a phenomenal story in the past thirty years, which is unthinkable in the box of conventional economic theories. Continue (继续)
China’s Overall Debt (Government + Corporate + Household) is at a manageable level on an international standard. The ratio of total debt to GDP is close to 200%, Continue (继续)
China’s Bank Loan is one of the highest in the world, only slightly lower than UK, measured by Bank loan/GDP. The other countries with such a high ratio are Italy, Germany, Korea and Japan. USA and Brazil are among the lowest. Continue (继续)
Jim Chanos is the president and founder of Kynikos Associates, a New York City Investment Company that specializes in Short Selling. In October 2000, Chanos started to research on Enron Corporation, and concluded that the management was overstating the earnings. Accordingly Chanos started to short the share of Enron. During the same time, Enron’s share price dropped from $90 to $1 within a period of 12 months.
In January, 2010, Chanos opinioned that there is a huge property bubble in China (Read Article from NYT) which might bust any time. According to Chanos, China’s property problem is ‘one thousand times of Dubai’ (Watch a video click of Chanos Presentation Here). The main reason for Chanos to be bearish on China is the excessive capacity that seems mounting in a few heavy industrial sectors such as steel, cement and construction. Some notable examples include an empty city in Ordos (Read Article from Chinatells) and huge idle production capacity of iron steel (Read Graph from Chinatells). Therefore China could be potentially a good candidate for Chanos’ short selling list. Continue (继续)
Vitaliy Katsenelson is a Director of Research at Investment Management Associates. He immigrated to USA from Russia in 1991, and he is the author of ‘Active Value Investing Making Money in Range Bound Markets’.
Katsenelson made a compelling presentation in February, 2010 (Read the Presentation Here) that China’s collapse will come sooner rather than later. Katsenelson theorizes there are three stages of of crisis phases: 1) Late Stage Growth Obesity; 2) You Lie; 3) Super Steroids R Us. According to Katsenelson, China now is already at the third stage of crisis, therefore a collapse might happen any time from now. Katsenelson makes an analogy that China is like a running bus with a bomb as storied in the movie ‘Speed’. If the bus runs below 50 mph, the bomb will explode. Similarly, if China’s economic growth slows down to below 8% annually, all kinds of problems will surface and all small probability ‘black swan’ incidents will happen.
I think there is a good point from Katsenelson’s presentation that China will face a lot of problems if the economy slows down. Continue (继续)
Jing Ulrich is the managing director and chairman of JPMorgan’s China equities and commodities business. She is in charge of expanding JPMorgan’s equities business in China and worldwide as well as developing business opportunities that arise from China’s demand for commodities. Ulrich also created and runs JPMorgan’s “Hands-on China” series of expert speakers. Each year she organizes a China-investor conference that brings together over two thousand fund managers, corporate executives, and outside experts to discuss opportunities for investing in China.
Ulrich has long been a China Bull. In her latest article published on FT dated March 10, 2010 (Read Article Here), Ulrich defended China’s growth story as healthy and sustainable. According to Ulrich, none of the critics on China’s economic progress are well founded. The main reason is that China is a unique economy very different from that of US. China’s household debt is very low with minimal leverage and China’s potential growth of 10% per annum in the next 10 – 20 years could erase all the concerns on asset bubble and credit expansion. In addition, China government has launched tightening and expanding policy at the right time with the right scale, putting an additional safe valve to the economic machine. Continue (继续)
Nouriel Roubini is a professor of economics at the Stern School of Business, New York University and chairman of Roubini Global Economics, an economic consultancy firm. The New York Times labeled him “Dr. Doom”, whereas, in hindsight, IMF economist Prakash Loungani has called him “a prophet”.
Doctor Roubini wrote on Forbes as of April 1, 2010 (Read Article here) that China is likely to be labeled as ‘currency manipulator’ by USA. According to Dr. Roubini, ‘There is no doubt that China is manipulating its currency…it looks like a duck and acts like a duck – it is clearly a Peking duck’.
To be fair, I tend to agree with Doctor Doom that China’s FX policy shows a sign of manipulation in the last 12 months by ‘soft pegging’ the RMB to USD. It would be difficult to argue that a ‘fixed FX policy’ is not ‘manipulation’. Ironically, the pegging per se is a double edged sword. For example, by pegging RMB to USD, the trade weighted exchange rate of RMB actually appreciated significantly during Q4 ’08 and Q1 ’09 following a resurgence of USD (See Graph from Chinatells). Therefore the rate change of RMB is not a purely ‘manipulated’ one way move. By appreciating and then depreciating together along with USD, the net effect is limited change with much lower volatility, which is quite helpful to the importers and exporters (Read Article from Chinatells). Continue (继续)
10 years ago, it would be a superior honor for a young kid to receive an offer from a college in China. Such a social recognition has a deep root from history. The traditional view is that to become a college student is a first critical step towards wealth, power and social status – in other words, prosperity, for the student himself, and his/her family. A lot of old Chinese sayings can be found to express this view, such as ‘those who study well become governors’. Therefore if a kid receives an offer from a renowned university in China, such as Qinghua University of Beijing University, the whole village will cheer up and celebrate.
Such a notion, however, is being challenged in the recent two years. When those lucky kids graduate from the university after four years of study, unfortunately they find themselves unwanted on the job market (See Article from NYT). Continue (继续)
China’s Broad Money Growth (M2) Tops world in 2009. In 2010, it is likely to slow down (estimated) and give away the championship to Brazil and India. Continue (继续)
Are you a China Bull? (您对中国有信心么)
Is there a bubble in China property (中国房产有泡沫么)
Secret for China's Growth (中国经济增长原因探讨)
1421: the year China discovered the World
China's Environmental Crisis (中国的环境威胁)
China's Unfinished Revolution (未完成的革命)
Mr China – A memoir (中国先生)
The Chinese Century (中国世纪)
The State of China Atlas (中华新地图)
To live (活着)
Who will Feed China: Wake Up Call for a Small Planet (谁来养活中国)
Asia Hotel
WCM
Chinatells (主页)