2017-01-18

Chinese Media Calls Top in First-Tier Housing Market

iFeng: 证实了:特大城市亮出杀手锏!房价拐点来了
New Year, the property market has become the focus of public attention. Part of the real estate control policy continues to tighten, many hot city commercial housing chain volume dropped significantly. The industry said that the policy tightened with the previous Central Economic Work Conference proposed the establishment of long-term mechanism for the property market, the return of housing properties, to promote the healthy development of real estate echoes. The overall housing prices in 2017 is expected to be more stable or slightly down.

We're Gonna Need A Bigger Debt

iFeng: 今年赤字率预计仍保持3% 地方债规模适度扩大
Into 2017, in accordance with the central economic work conference tone, fiscal policy will shift to a more active and effective. Reporter learned that this year's fiscal deficit rate is expected to remain at around 3%, but the overall scale of local debt will be modest expansion.

Local debt replacement moderate expansion

According to the arrangements of the Ministry of Finance, in 2016 the scale of new local debt is 1.18 trillion yuan, which is nearly doubled compared to 2015. Among them, the general debt of 780 billion yuan, 400 billion yuan of special bonds. Replacement debt, the Ministry of Finance Wang Ke Bing, deputy director of the budget last year, has publicly stated that the year may be 5 trillion yuan of debt replacement.
I assume modest expansion of debt will be less than the nearly 100 percent increase in 2016?

Li Keqiang Calls for Tax Cuts 3 Times in 2 Weeks

Maybe year 5 will produce results?

iFeng: 李克强半月三次谈减轻企业税负 这次透露了根本原因
"Why do we need to intensify efforts to small and micro enterprises tax cuts? Why should continue to promote the commercial system reform? These are to encourage entrepreneurship!" In the January 18 State Council executive meeting, Li Keqiang answered why he has been Concerned about tax cuts.

...January 13, Li Keqiang chaired a forum to listen to experts and scholars and business people on the "Government Work Report (Draft)" comments and suggestions. Li Keqiang said that this year to adhere to the government tighten the day to continue to compress general expenses for corporate tax cuts to make room for less this year to reduce fees and other non-tax burden on the market to have personal experience, the State Council to develop check.

DXY Analog, RMB Breather

Where is the U.S. Dollar Index according to the analog?

The analog points to a correction in the dollar, one that should bottom about 3 percent lower around April. Right about the time Congress will be finalizing the budget and tax reforms.

A dollar correction will give the PBoC breathing room for a few months as well.

China Home Prices Slow, What Happens to Credit?

After a blitz of buying and credit restrictions, the governments at all levels achieved their goal of reversing real estate prices.

Home prices increased 0.25 percent nationally in December. The Top 5, the first-tier plus Xiamen, recorded an average price gain of 0.0 percent. Guangzhou was the only gainer, with a rise of 0.7 percent. The hot second-tier cities I have tracked in prior months (Haikou, Wuhan, Fuzhou, Hefei, Hangzhou, Nanjing, Tianjin) reported a net decline. Third-tier cities drove the gains, although the top two gainers are second-tier cities: Sanya (+1.2 percent) and Chongqing (+1.1 percent). Now we know why Chongqing launched its real estate regulation blitz: Chongqing Home Sales Collapse Amid Restriction Blitz.

Existing home prices gained 0.30 percent nationally. They were up slightly in the first-tier, and up big in some second-tier cities such as 1.6 percent in Nanjing.

With credit slowing and real estate growth slowing, the ball is now in the economy's court. Companies will have to step up their lending, or the central government will have to force feed credit through the SOEs once again if the government wants stability. Credit is the lifeblood of the economy and Chinese bankers spent much of the past year trying to make as many "safe" loans as possible, mainly mortgages and government lending, to the point where residential borrowing was more than 100 percent of new credit at banks in July: Depression: Residential Mortgages Account for 102pc of Lending Growth, Rate Cut Coming
I recently had a chat with the president of a grassroots bank, they saw the collapse of a large number of small and medium enterprises, manufacturing enterprises reluctant to borrow, demand is very weak, very worried about the outbreak of bad loans, now the only source of relief is government projects, the platform loans, he said that because in his 30 years of lending experience, the government loans never go bad, at worst they are extended, so we are all seeking to lend to government projects, and this is the reason the lending platforms have too much money, also a reason for the jump in M1.
For a time in 2016, mortgage lending was propping up credit growth:
Credit makes the modern economy go. Credit growth is money supply growth in modern financial systems and without it, the economy will slow. Leave aside what is the right or wrong policy (whether the growth is sustainable or not): China wants stability in its economy, therefore it must have credit growth. If the housing market slows and mortgage lending slows, a new source of credit growth must be found. In July, loans to households increased 1.5 percent. In December, they still increased 1.5 percent. If household lending slows in 2017, as one would expect given the government's success with buying and credit restrictions, where will new loan demand come from?

PBoC: 存款类金融机构人民币信贷收支表, Summary of Sources And Uses of Credit Funds of Financial Institutions(in RMB)
NBS: 2016年12月份70个大中城市住宅销售价格变动情况

2017-01-17

When It Becomes Serious, You Have to Lie

Global Times: Liaoning government admits it falsified economic data
Chen Qiufa, governor of Northeast China's Liaoning Province, admitted that some local fiscal and economic figures between 2011 and 2014 were falsified and fraudulent, the People's Daily reported on Tuesday.

During the 8th meeting of the 12th People's Congress of Liaoning, Chen said that the province began to increase data accuracy in 2015, when financial revenue contracted 33.4 percent year-on-year. Last year, Liaoning's revenue rose 3.4 percent to 219.9 billion yuan ($32 billion), according to the report.
Liaoning's recession has been the subject of several posts.

Finding 50 Cents

Marginal Revolution: Authoritarians Distract Rather than Debate
It’s long been known that the Chinese government hires people to support the government with fabricated posts on social media. In China these people are known as the “50c party”, so called because the posters were rumored to be paid 50 cents (5 jiao or about $.08) to write the posts. The precise nature and extent of the 50c party has heretofore been unknown. But in an amazing new paper, Gary King, Jennifer Pan and Margaret Robert (KPR) uncover a lot of new information using statistical sleuthing and some unusual and controversial real world sleuthing.

...First, the posters are government workers paid on salary not, as the 50c phrase suggests, piece-rate workers. Second, and more importantly, it has long been assumed that propaganda posts would support the government with praise or criticize critics of the government. Not so. In fact, propaganda posts actively steer away from controversial issues. Instead, the effort appears to be to distract (especially to distract the people from organizing collective action; thus distraction campaigns peak around times and places where collective action like marches and protests might become focal).
Lots more info at the link, including how they determined which social media accounts were Wumaodang.

2017-01-16

Provinces Begin Announcing GDP Growth Targets

iFeng: 18省调低今年GDP增速目标 多为区间目标(表)
In addition to Chongqing, the local government work report shows that Tianjin, Beijing, Shanghai and other 18 provinces to reduce this year's economic growth target, including Jilin, Beijing, Shanghai, Shanxi and other 16 provinces to its economic growth rate for the interval target .

Does this mean that the country's economic growth this year will be transferred to the interval target. 10, Development and Reform Commission Director Xu Shaoshi news conference in the country after the news conference that the economic growth in 2016 is expected to be about 6.7% in 2017 will be based on internal and external environment to identify an economic growth target, "GDP target is expected, and Consider employment and prices. "