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
China, China CPI, China Exports, China Imports, China Industrial Production, China Loan Issuance, China Money Supply, China PPI, China Trade Balance