China Stimulus
Highlights Odds are that the recently improved access to financing will allow property developers to boost construction volumes modestly in the coming months. Yet, the outlook for new credit origination and government tolerance of another credit binge is…
Highlights So what? The U.S.-China deal is not shaping up as well as the consensus holds. Why? The odds of reaching a deal by June are rising, but no higher than 50%. Unemployment is a constraint on the Chinese side but stimulus reduces urgency…
Highlights In their current form and size, perpetual bonds issuance and the central bank bills swap program are unlikely game-changers for the banking system in China. However, this mechanism constitutes monetization of banks’ capital and bad assets, i.e…
Highlights So What? Ongoing reforms will drag on China's policy easing measures. Why? Xi Jinping is not abandoning his "Three Tough Battles" against leverage, pollution, and poverty. China is striving to contain leverage, despite the shift of rhetoric…
Highlights We have deciphered global trade linkages to determine which countries are most at risk from a slowdown in EM/China imports. Our analysis takes into account not only the destinations of shipments but also the types of goods. Peru, Chile, Korea…
Highlights The odds of a significant reversal in the current structural downtrend of China's manufacturing productivity growth are low. Meanwhile, the country's manufacturing sector remains highly competitive in the global goods markets. The extent of…
Highlights The scale of "de-capacity" reforms is diminishing considerably - old, inefficient capacity shutdowns are declining. Sizable new technologically advanced and ecologically friendly capacity is coming on stream for both steel and coal in 2018 and…
Highlights In China, the central bank and commercial banks conducted outright monetization of real estate inventories, which caused the property markets' recovery post 2015. Despite destocking, aggregate property inventories remain excessive. Elevated…
Highlights China and Brazil are two extremes in regard to investment and savings - the former saves and invests a lot, the latter very little. The key difference between Brazil and China is neither the existing amount of deposits nor their propensity to…
Highlights The financial system / banks cannot and do not lend out or intermediate national or households "savings". In any economy, new money/new purchasing power is originated by commercial banks "out of thin air". The term "savings" in macroeconomics…