China

Arcelor Mittal

China: Overcapacity Remains A Problem In The Steel Sector

Crédito y Caución (Atradius) | About 700 small steel mills, with 140 million tons of steel capacity deemed sub-standard, have shut down since 2016. Another 150 million tons of inefficient capacity at larger firms has also gone. However, steel production continues to climb, outpacing demand


US elections, Joe Biden

Xi, Biden Switching Strategies For Dominance

Alicia García Herrero (Natixis) | US President Joe Biden’s long-awaited trip to Asia got off to a poor start, after ASEAN leaders’ official visit to the White House saw hardly any relevant policy decisions, and Biden’s stingy pitch of $150 million to ASEAN economies. Based on that example and Biden’s difficult political situation at home, the stakes for his trip to Asia were low. But reality has proved the pessimism…


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Lockdowns Around Shanghai Are Especially Painful For Cars, Electronics And Chip-makers

Alicia García Herrero (Natixis) | When the Chinese economy sneezes, the global supply chain catches a cold. After the successful containment at the initial stage, China has decided to maintain its dynamic zero-covid strategy against a more contagious albeit milder variant of the virus, namely Omicron. The approach has initiated the lockdown in Shanghai. Given its economic size, trading role, and the contagion risk of lockdowns in the surrounding provinces,…


car makers europe

The Playbook For Chinese Carmakers To Mitigate Waning Domestic Demand And Higher Costs

Alicia García Herrero (Natixis) | After three years of sluggish performance, China’s car sales finally reverted to positive growth in 2021. The auto industry is essential for the Chinese economy as it forms 28% of retail sales and 7% of industrial revenue. Without a recovery in car sales, it is hard to imagine a solid rebound in consumption. In this note, we analyze the demand for passenger cars in China…


china blues 1

Can China Bail Out Putin?

Alicia García Herrero (Natixis) | The unprecedented sanctions imposed on Russia in the wake of its invasion of Ukraine are likely to have devastating consequences. But this will depend on whether Russia manages to bypass the sanctions or, at the very least, mitigate them. One important consideration to answer this question is China’s potential role in offering a helping hand to the Russian economy. China’s economic size and financial clout,…


china central bank

China Continued To Deleverage Towards The End Of 2021 Thanks To The Corporate Sector But With An Increase In Government Debt

Alicia García Herrero (Natixis) | China’s debt-to-GDP ratio continued to decrease in Q4 2021 to 264.3% from 266.5% in Q3. Notwithstanding the deleverage path in 2021, the debt is still much higher than the pre-pandemic one (247.5% in Q4 2019). Chinese corporates contributed the most to the deleveraging process, as their debt to GDP ratio further dropped to 155.1% in Q4 2021 from 158.3% in Q3 2021. Because of the…


An exterior view of China Evergrande Centre in Hong Kong

China’s Regulatory Crackdown: What To Expect?

Alicia García Herrero (Natixis) | Chinese policy makers have been engaged in a massive regulatory crackdown for over a year. A number of sectors have been affected, starting with the tech sector, followed by the education sector. At the same time the real estate sector has also been severely affected by a specific regulatory crackdown (the three red lines) and a more general antitrust push has also taken place. In…


china central bank

Q4 GDP Enough To Set China’s 2021 Growth Above The 8% Benchmark But With Challenges Ahead For 2022

Alicia García Herrero (Natixis) | Chinese economy has rebounded by 8.1% in 2021 after slumping to 2.2% in 2020. While the Q4 year-on-year growth rate was lowered to only 4%, the current growth momentum was still positive as the QoQ growth rate (seasonally adjusted) have accelerated to 1.6% in Q4 from 0.7% in Q3. However, there are signs that the Chinese economy is facing increasing challenges, raising questions on whether…


China

China’s September Trade Surplus Rises To $66.6 Billion

Link Securities | China’s General Administration of Customs reported early this morning that the September trade surplus rose to $66.67 billion, up from a consensus expected reading for a $45 billion surplus, and up from a figure of $53.3 billion in August. Dollar exports rose by 28.1% y-o-y, against a consensus reading of 21.5%, and compared with a 25.6% increase in August. Meanwhile, imports rose 17.6 per cent year-on-year, compared…


An exterior view of China Evergrande Centre in Hong Kong

Evergrande Is Not Lehman

Intermoney | A slightly higher opening (Eurostoxx futures +0.3%) after yesterday’s 2% falls in the main American and European indices, with the Ibex registering a better relative performance, buoyed by the tourism and defensive sectors. This environment of greater risk aversion and fears about economic growth also translated into additional moderation of IRRs. In the case of Europe, this was also supported by the statements from Villeroy, the governor of…