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China In One Chart

Tyler Durden's picture




 

Via JPMorgan's CIO Michael Cembalest,

China is slowing, mostly due to a gradual, steady decline in private sector activity. One example: the decline in fixed asset investment (e.g., business capital spending) at private sector firms relative to firms that are state-controlled. Premier Li Keqiang’s reforms are aimed at making it easier for entrepreneurs to start private sector firms, but in the current climate, private sector investment growth continues to fall.

 

 

The Chinese central bank injected some liquidity into the domestic banking system recently, but it was only for 3 months and not meant to address the more structural issue of declining private sector demand. While export growth and job creation still look pretty good, the overall picture is one of an economy growing at 7%, and that’s with the contribution from government spending. Government spending is set to slow in the second half of the year; the authorities continue to reduce the size of the shadow banking system which extends credit; and the overheated housing market is still in decline as well when looking at national home sales and a 70-city home price average.

We expect continued weakness in Chinese data for the rest of 2014 and into next year as well.

Source: JPMorgan

 

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Mon, 10/06/2014 - 20:20 | 5296952 Pooper Popper
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No stop signs ,

speed limits,,

You know the words...

were on the ...

Mon, 10/06/2014 - 20:19 | 5296955 Carpenter1
Carpenter1's picture

China is not growing at 7%

Mon, 10/06/2014 - 21:43 | 5297221 KnuckleDragger-X
KnuckleDragger-X's picture

Nope they ain't,  but the problem is the numbers are very squishy. We have a bit of guessing from outsiders but those are just educated guess's at best. the PBOC is printing like mad to prop it all  up but somebody is going to sneeze sooner or later and blow over the house of cards.

Mon, 10/06/2014 - 20:32 | 5296992 mickeyman
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But they have so many new, empty apartment buildings

Mon, 10/06/2014 - 20:34 | 5297003 mickeyman
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and shopping malls http://worldcomplex.blogspot.nl/2014/08/are-ghost-cities-in-china-really...

I'd have just posted a picture, but don't know how

Mon, 10/06/2014 - 21:39 | 5297207 mickeyman
mickeyman's picture

The picture I wanted to add is at the bottom of this, showing new buildings being thrown up in Xi'an

http://worldcomplex.blogspot.nl/2014/10/xian-is-flat-yes.html

Mon, 10/06/2014 - 20:39 | 5297012 Bumbu Sauce
Bumbu Sauce's picture

What say you 50 Cent Party?

Mon, 10/06/2014 - 20:40 | 5297022 limacon
limacon's picture

Still well within acceptable parameters .

See 

http://andreswhy.blogspot.com/2012/03/reduced-chinese-economic-growth-ra...

Mon, 10/06/2014 - 20:45 | 5297037 Fred123
Fred123's picture

Don't worry, the Chinese people are sure the gov't will take care of this problem.........rofl....yes, they really, really, believe that they can and will.

Mon, 10/06/2014 - 20:47 | 5297042 starman
starman's picture

There are two economy  systems for this world the centuries  a  head.

Orwellian or Kommunism!  

To many people not enough jobs!  

Mon, 10/06/2014 - 22:54 | 5297419 NumNutt
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To many unskilled workers, not enough low skill labor jobs.....There fixed that for you.

Mon, 10/06/2014 - 21:01 | 5297091 F0ster
F0ster's picture

A few months ago Bernie Lo read one of my tweets out on live TV that suggested to look at the BDI and that China was really growing at around 5.5% - he laughed as if it couldn't be possible. What a tool.

Mon, 10/06/2014 - 21:09 | 5297114 Apostate2
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I was watching Bloomberg Asia Edge as they were dicussing China's growth and so on. The Bloomberg China expert guest said something like 'But China has deep pockets' and one of the hosts said 'yes deep pockets but short arms'. 

LOL.

Mon, 10/06/2014 - 21:53 | 5297254 q99x2
q99x2's picture

Looks like China will have to go to JP Morgan and Goldman Sachs to fix it.

Mon, 10/06/2014 - 21:55 | 5297263 Wild Theories
Wild Theories's picture

and it takes JP Morgan to tell us: economies only need one thing - fixed asset investments!

Mon, 10/06/2014 - 23:12 | 5297464 DeusHedge
DeusHedge's picture

'fixed' > 1 year

Mon, 10/06/2014 - 23:25 | 5297512 AdvancingTime
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The debate continues as to how stable china really is. Much of the recent growth in China after 2008 came from a massive 6.6 trillion dollar stimulus program that expanded credit and poured massive amounts of money into the system. This money encouraged expansion and construction with little regard as to real demand or need.

Now China finds itself in a credit trap. For years the people of China have had the habit of saving much of what they earn but the low interest rates paid at banks has not rewarded savers. With few investment options much of this money has drifted towards housing and driven housing prices sky high. The economic efficiency of credit is beginning to collapse in China and the unwinding of China’s giant credit spree could be very painful. More in the article below.

http://brucewilds.blogspot.com/2014/03/china-and-great-credit-trap.html

 

Tue, 10/07/2014 - 00:06 | 5297609 techstrategy
techstrategy's picture

Consider the source people.   China has the gold that JPM traders sold to front run financial assets and effectively steal from all of us.  Now,  JPM needs the gold back.   So,  tell everyone China will implode.   Note,  the other JPM article tonight was trying to encourage a run on bonds (further note that the Fed did not include municipal bonds in the HQLA definition).  The Fed and TBTF banks are pinned and are trying to shift the losses onto us.  The problem is that they gave so abused "infinite" leverage for so long that they didn't realize it was finite and that markets cannot function without trust. 

Tue, 10/07/2014 - 04:24 | 5297853 Duffy
Duffy's picture

Gee who would have thought an economy dependent on exports...

 

Still, the Chinese make shit. The Americans make and trade debt. 

 

Who's better off in the mid term?

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