Chinese credit fears mount as growth rate falls to 6.7% – business live

Discussion in 'Market News' started by Lily, Apr 15, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
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    All the day’s economic and financial news, including reaction to China’s latest GDP figures

    9.17am BST

    Concern is growing over China’s debt levels after the amount of new credit surged last month.

    Chinese banks extended 1,370 billion yuan of new loans (£150bn) in March -- almost doubling Februarys’s 726.6 billion yuan.

    It has taken considerable monetary and fiscal policy loosening to stabilise economic growth at this level and this effort has distracted from the reform agenda that is fundamental to long-term economic sustainability.

    Levels of debt within the Chinese economy are too high and we are concerned that the authorities are not moving quickly enough to address the issue.

    “This can’t continue. The key is efficiency of credit use because we know that some of the credit is used to keep these zombie companies alive.”

    #China's credit-driven growth model in one chart! Corporate credit growth outpaced #GDP growth every single year.

    8.42am BST

    Rating agency Moody’s is worried that China’s stimulus efforts are storing up long-term problems:

    Moody's on China GDP: shows Beijing's ability to stimulate economy, support for near term growth may further increase long term imbalances.

    Moody's on China: sign of stimulus propping up growth- rapid growth in fixed asset investment (13.8% in real terms) nearly twice fast as GDP

    8.35am BST

    Today’s growth figures suggest that the recent splurge in Chinese government spending is working.

    Anna Stupnytska, Global Economist at Fidelity International, shows how investment by state-controlled companies has soared by nearly a fifth:

    Crazy #China data 2: state-directed investment +23%yoy. Highest since 2009. Huge stimulus supporting activity

    8.27am BST

    European shares have edged lower at the start of trading:

    8.17am BST

    China’s official news agency, Xinhua, is sticking to the party line today.

    It has tweeted several graphs, arguing that the country’s economy is in good health:

    To examine the health of China's economy in Q1, four simple graphs to check:

    8.12am BST

    Julian Evans-Pritchard of Capital Economics reckons China’s true growth rate is lower than the official estimate or 6.7%.

    He’s hopeful, though, that its economy is stabilising.

    “As always, the GDP figures will be met with some scepticism. For our part we do think that China’s economy is expanding slower than the official figures suggest – our China Activity Proxy (CAP) points to growth of 4.1% y/y during the first two months of the year.

    More positively though, our CAP looks to have at least stabilised last quarter, suggesting that policy easing has helped to avert a deeper downturn.

    All the results are above market expectations, it shows the rebalancing of the economy is proceeding to plan. If anything, the figures are surprisingly high, so one wonders about the sustainability of the growth rate for future months. Hopefully we’ll see other economies around the world focus on lifting their own growth rates.”

    "Sound development" is official line as #China economy grows 6.7% in Q1, while a 7 year low, it is consistent with a Soft Landing.

    7.55am BST

    Asian markets have fallen following the news that China’s annual growth rate has fallen to 6.7% in the last three months.

    The Shanghai Composite index has dropped almost 0.5%, while Japan’s Topix is down 0.75%.

    7.45am BST

    Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

    If only everything in life was as reliable as China’s GDP.

    #China GDP Growth long term chart #economics @MarkYusko @Mick_Peel @PaulGambles2 @AlastairWinter @WorthWray

    #BREAKING China Retail Sales rose 10.5% (beats estimates of 10.4%)

    #BREAKING China Factory Output rose 6.8% (beats estimates of 5.9%) - highest since June last year

    “Data from the investment-industry nexus show that the tried and tested stimulus measures of recent months have stirred up the physical part of the economy, especially towards the end of [the first quarter], while consumption remained relatively robust.”

    The data confounded some expectations that improved economic performance in February and March would offset the sharp slowdown seen during January.

    Related: China quarterly GDP growth slows but signs of stability emerge

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