Standard & Poor’s have just raised China’s long-tem sovereign credit rating to A+, based on its strengthening external position. In part this reflects China’s strong fiscal position – in June according to a release today by Credit Suisse, China’s consolidated fiscal surplus for the previous twelve months reached RMB 443.5 billion, equal to about 1.5% [...]
There is an interesting article in yesterday’s Xinhua headlined “Capital shortages top risk for China’s SOEs.” This seems at first counterintuitive given China’s rapid reserve accumulation, but the explanation may be in the article itself. According to the article: Lack of capital was the biggest risk facing China’s centrally-administrated State-owned enterprises (SOEs), according to [...]
After Friday’s Politburo meeting it seems that the perception that there has been a shift in policy-making is nearly unanimous. The meeting’s focus on “stability” and “continuity” included as a major objective the maintenance of “sustained, stable, and relatively fast growth.” And although “preventing prices from rising too fast” continues to be described as an [...]
RMB appreciation is going to slow temporarily
Jul 25th, 2008
The very authoritative People’s Daily had a widely discussed front-page article yesterday calling for policy-makers to do the necessary to prevent the economy from slowing down. It implicitly criticized the anti-inflation policies of the PBoC by arguing that “The current performance of the economy is sending us a warning signal: when we fight inflation, we [...]
Housing is still up, but rationing is spreading
Jul 21st, 2008
A report in today’s China Daily says: Second-quarter housing prices in 70 large and medium-sized Chinese cities rose 9.2 percent year-on-year, said the National Development and Reform Commission and the National Bureau of Statistics on Monday. The rise was 1.8 percentage points less than in the first quarter. One of the regular debates [...]
Tightness in the money market?
Jul 20th, 2008
The stock market raced up today, with the SSE Composite closing at 2778, 3.49% higher than yesterday’s close. Since investors are still digesting yesterday’s mix of good news and bad news – GDP slowing, fixed asset investment soaring, CPI down, PPI up – I suspect the main cause of the decline may have been the [...]
American-style crises versus Latin-American-style crises
Jul 15th, 2008
This news is four days old, but it is still worth noting that according to a Xinhua report, the NDRC released a circular Friday to announce that, in an attempt to slow hot money, it will institute new controls to manage foreign investment inflows. The move will also safeguard the country’s economic safety, protect [...]
After a decent day Monday (up 0.7%) the market today took a beating today, with the SSE Composite closing at 2779, down 3.4% for the day. The decline was probably partly caused by mortgage fears in the US (insurance companies and banks, who may be big holders of Freddie Mac and Fanny Mae, led the [...]
The PBoC announced this morning that total reserves at the end of June reached $1.809 trillion (around 45-50% of annual GDP). This breaks down to $153.9 billion growth in the first quarter of 2008 and a $126.6 billion growth in the second. The PBoC do not release monthly figures officially, but we get pretty good [...]
Money is way too loose, not too tight
Jul 11th, 2008
The Shanghai stock market capped yesterday’s 1.5% decline with a further decline today of 0.7%. It’s still been a great week, up nearly 8%, but the party, at least for a while, seems to have ended. At least one government official is, alarmingly enough, wondering if there are ways to manage the process better. [...]
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