In this briefing:
- UK Trip – Wake up to Deflation Risk
- Today’s NBS Data On China House Prices Across 70 Cities – Lower Priced Cities Keep Catching Up
- US Dollar Demand – Fading Appetite
- Confluence of Politics – China Bans Australian Coal Imports (Flash Note)
- The Internet: Hacks, Clicks, and Money
1. UK Trip – Wake up to Deflation Risk
By Bo Zhuang, Chief China Economist
- London-based investors are turning cautiously optimistic on China’s growth outlook amid the latest easing measures in January
- There is still little awareness about the rising deflation risk
- Interest in the trade war has subsided
2. Today’s NBS Data On China House Prices Across 70 Cities – Lower Priced Cities Keep Catching Up
Today’s data from the National Bureau of Statistics (NBS) on new home prices for 70 major cities in January shows on average a marginally accelerating year-on-year price growth and a slower month-on-month increase. This continues to contrast with the year-on-year deceleration in SouFun-CREIS 100 Cities price index.
3. US Dollar Demand – Fading Appetite
In 2011 the world experienced the best year of demand expansion – in US dollar terms – in any year since the financial crisis, until 2018 that is. But you would hardly realise that that was the case by reading the newswires, the stories there since early 2018 have been about ‘synchronised slowdown’ and, in particular, the demand downdraft from China. The reality is that developed countries (the US, EU, UK and Japan) plus developing Asia (China, India and the Asean-4) produced US$4.1trn of ‘new’ GDP demand in 2011 and in 2018 was on course to produce US$4.1trn in new dollar demand.
4. Confluence of Politics – China Bans Australian Coal Imports (Flash Note)
- China implements coal import caps specifically targeting Australian producers
- Unclear as to how widespread these restrictions will eventually be
- Thermal and metallurgical coal exports affected
- Impacting ~A$8.4Bn of metallurgical coal exports; or 4.4% of national income
- Thermal coal exports affected worth ~A$3.8Bn; or an additional 2% of national income
- Collectively, thermal and metallurgical exports equate to ~0.9% of Australian annual GDP
- Actions appear to be a response to blocking Huawei bidding for the 5G network
- Recent Chinese cyber-attacks harden Australian Government’s resolve
- Expect similar Chinese measures (in time) to be applied to other commodities and industries
5. The Internet: Hacks, Clicks, and Money
There is this thing called the internet that can be pretty cool sometimes. In all seriousness though, the internet is a driving force for making money and spending money. Last week we took a long look at mobile phones and continuing a deep dive on technology today we take look at the internet in China. This will not be a total encyclopedia but a snap shot of some key features.
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