China GraphFest May 11, 2010

As usual all the data from China cones at the same time. So, let’s start. In short: China trade balance for April was marginally positive, but in my opinion the China ability to run large trade surplussed is lost and will not return in short term. Implications are diverse, maybe most important the quantity of USD needed to be recycled via. U.S. government debt investments will cease to grow. Also, China cannot continue to import commodities at prices this high in long term. We can see an import price inflation mostly on commodity pride rises and export price deflation.  Either prices will come down, either China will import less, or both.

CNY exchange rate, maybe we will see a depreciation, contrary to the broad expectations and U.S. demands for appreciation.

Chart 1. China Trade Balance

Source: Bloomberg

Price increases have moved from property markets to food where it is harder to contain. China will need to introduce broad tightening measures to contain inflation, as property focused measures are apparently not working.

Chart 2. Producer & Consumer Price Indexes

Source: Bloomberg

Monetary expansion is still at it’s full force. Economy is feeding from it, when (monetary) expansion stops…a pyramidal scheme is broken. So, this looks quite intimidating.

Chart 3. Monetary Aggregates

Source: Bloomberg

New loans again ticking higher.

Chart 4. China New Loans

Source: Bloomberg

Industrial production consolidating, but as inventory adjustment has ran its course, the gains will be harder to achieve.

Chart 5. China Industrial Production

Source: Bloomberg

Yo can see the central bank policy action results, but it looks like it is not enough.

Chart 6. Fixed Assets Invesment

Source: Bloomberg

Low base effects significant, but price inflation not contained.

Chart 7. China NDRC Property Price Index

Source: Bloomberg

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This entry was posted on Tuesday, May 11th, 2010 at 7:14 am and is filed under China. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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