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Central Country: I have never been sure how I am supposed to read the now three-year decline in nominal reported imports into China. Three-quarters of China’s imports are made up of machinery, transport equipment, electrical machinery and apparatus, and mineral fuels. The decline thus might be in substantial part a reorientation of China’s domestic demand for automobiles toward domestic producers, but how big could that have been over the past three years? And given the orientation of the Pearl River Delta and the Lower Yangtze toward the globalized value-chain economy, I do not see how they could be flourishing without generating higher real demand for imports—not a 15% fall. But are the numbers on imports even real? We are highly confident that other numbers are not. Certainly the bond market’s 1.7% nominal for the ten-year yield suggests current and expected depression and stagnation, even given safe-harbor demand:

Brad Setser: ‘President Xi has lost Ling-Ling Wei ... Wow. For what it is worth, I also had the chance to visit China this fall, and was also surprised by how dark the mood was... The collapse in import volumes is another worrying sign… <x.com/Brad_Setser/statu…>

Lingling Wei: China’s Bond Yields Scream the ‘D’ Word: ‘You heard right: “D” as in depression…. China’s 10-year sovereign yield… is around 1.7%, a full percentage-point plunge from a little over a year ago….. The speed of the drop is astonishing. The lower the yield falls, the deeper the market is signaling economic stress. Official statistics show that China’s economy… is expected to reach the 5%-or-so target for the full year. In reality, businesses are struggling to keep their lights on, people are having severe difficulty in finding jobs, and municipalities are drowning in debt. Even government employees aren’t getting paid. “It feels like depression,” a reader in China recently wrote to me. And for all the talk about help coming, the government hasn’t delivered. The power center in Beijing is facing a crisis over policy credibility…. The leadership wsjchina.createsend1.co… by pledging more fiscal and monetary support at a high-level confab…. Except… the bond market is clearly casting a vote of little confidence… <wsjchina.cmail20.com/t/…>

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Dec 24
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2:23 PM