分析师解读中国八月宏观经济数据(from Barron's)

Diffusion

Aug China Data Reflects Slowdown, But Economists Find (Possible) Tentative Hints of Stabilization

By Reshma Kapadia

Over the weekend, China released a slew of data for economists to dissect:

First, the stats:

+August industrial production growth came in at 8.9% versus a year-ago, a bit weaker than consensus expectations.
+ Fixed asset investment was weaker-than-expected, growing at just 20.2% from last year.
+ Nominal retail sales rose 13.2%, a teeny positive surprise.
+ CPI bounced back almost in-line with expectations to 2% in August from a year-ago, driven by food inflation from surging vegetable prices.
+PPI shows deflation, dropping a bit more than expected by 3.5% from a year-ago.
+And out this morning: China’s trade surplus came in  wider-than-expected  $26.7 billion in August–a welcoming development as imports fell but another sign economists say policymakers need to ease. Exports  rose 2.7% in August from a year earlier,  above economists’ median forecast of a 2.5% expansion, the WSJ reports.

SG Global Wei Yao’s read: “Chinese policymakers will have to leave all options open. In addition to interest rate and required reserve ratio cuts, officials have hinted at several other options including export subsidies and more consumption measures (subsidies and tax cuts). However, the most effective tool in the short run remains public investment. ”

Some signs of hope: Yao noted some hints of stabilization of end demand.

+ Activity in the property sector showing signs it isn’t deteriorating more.
+ Construction and investment growth rebounded after three straight monthly declines.
+ Infrastructure fixed asset investments picked up notably
+ Retail sales data suggests consumption was not “as frail as feared.”

Yao expects CPI it to rise further to above 3% by year-end, driven by the impact of rising corn and soybean prices.And the deflation in the PPI reflects  the country’s massive excessive capacity, which she says may take years to eliminate. “Monetary policymakers have to be careful not to make the situation worse. Keeping monetary conditions tight as a response to imported inflation or supply-side issues will be a risky choice,” Yao adds.

IHS economists Xiangang Ren and Alistair Thornton write: With CPI rising off what they  think may be the “bottom of the inflation cycle,” the government faces a quandry of trying to revive growth but having less room to do it as inflation pressures build.  Price gains returning to the property market exacerbate the situation.

“That makes it tough for policymakers to pursue what President Hu, in an APEC speech, recently characterized as ways to promote ‘home-driven growth’. A sudden shift to more aggressive loosening could spill into consumer and asset price inflation,” the economists write. Since CPI  not PPI is the main metric in interest rate deliverations, the economists argue that the likelihood of a cut is now clearly smaller than last month: ”Window guidance and fiscal stimulus will be the main tools the government deploys to stabilize growth.”

HSBC economists Hongbin Qu and Junwei Sun’s take: The data justified the latest easing moves (which have not yet filtered through to lift growth) and Beijing will likely increase fiscal and monetary easing over the coming months, on top of last week’s approval of infrastructure projects. There are “tentative” hints of stabilization, such as the rebound of heavy industries and electricity growth, investment for new projects accelerated and funding conditions gradually improved.

HSBC doesn’t think the pick-up in CPI constrains policy easing. HSBC’s economists expects one more 25 basis point rate cut and additional required reserve ratiocuts in the coming months, which should generate a moderate growth recovery in the fourth quarter.

The SPDR S&P China ETF (GXC) closed Friday at $63.05.

learner2009