Submitted by Gordon Johnson of Axiom Capital
We believe that exhibit 1 says a lot: it shows that despite a record level of new credit issued by China’s PBoC YTD through Oct. 2017 (which stands in stark contrast to government authorities continued statements that China is de-levering), China’s economic backdrop is currently experiencing:
(a) monthly construction new start (commercial + residential + office) growth slowing Y/Y (Ex. 2), (b) monthly fixed asset investment growth slowing Y/Y (Ex. 9), (c) monthly cement output slowing Y/Y (Ex. 5), (d) monthly electricity production slowing Y/Y (Ex. 6), (e) monthly M2 money supply growth slowing Y/Y (Ex. 7), (f) monthly household loan growth slowing Y/Y (Ex. 8), (g) monthly private fixed asset investment growth slowing Y/Y (Ex. 10), and (h) monthly home price growth slowing Y/Y (Ex. 12) – in fact, select data points have turned negative Y/Y. Stated differently, while the lion’s share of our client base continues to tell us, with respect to our bearish views on China… ‘President Xi Jinping will simply stimulate more if/when things get bad’, we would highlight, again as detailed in Ex. 1 below, China stimulated at a record pace in 2017, yet it did not resonate in improved economic activity (in fact, the exact opposite appears to be unfolding – i.e., economic growth is slowing across a number of data points).
This post was published at Zero Hedge on Nov 28, 2017.
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