Chinese Economics Thread

[Wrought]

Corporate profits were on the rise in H12025, reversing the downward trend from last year.

Chinese corporate earnings have started to pick up, helped by growing exports to Southeast Asia and government efforts to spur consumer spending. Net profits at mainland-listed companies rose 1% on the year in the January-June half, reaching 1.6 trillion yuan ($224 billion) for the first increase for this period in three years. It marked a turnaround from a full-year profit decline of more than 10% in 2024.

Real estate was a notable—if unsurprising—exception.

But many other sectors struggled in the first half -- notably real estate, where 46 of 100 listed companies posted net losses. Leading homebuilder China Vanke's loss topped 10 billion yuan, while peer China Evergrande Group was delisted from the Stock Exchange of Hong Kong in late August.

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[supercat]

As though we need more evidence that China's GDP has been underestimated grossly.

https://twitter.com/i/web/status/1965108412590510180

https://twitter.com/i/web/status/1797131985522925785

 

[GulfLander]

https://twitter.com/i/web/status/1965953517648015662

 

[Wrought]

Financial flows exceeded trade flows for the first time this year.

Now, after years of tentative opening, a tipping point has been reached that may have have global implications every bit as significant as China’s manufacturing revolution. For the first time, the amount of money pouring

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and

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of China in search of investment opportunities is exceeding the value of goods and services its

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generate.

A world-beating stock market rally has led the recent surge in two-way financial flows, which surged to an unprecedented $4.5 trillion in the first seven months of the year. But it’s not just about equities — heavy trading of Chinese banks’

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and foreigners’ buying of the country’s

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have also contributed to the increase in cross-border money movements.

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[tphuang]

I wrote up a thread on recent times of things that contributed to the energy security of China and also the mineral security like in terms of copper

https://twitter.com/i/web/status/1966211788283982231

 

[tphuang]

https://twitter.com/i/web/status/1965984643745984541

Starbucks has thrown in the towel in China.

At least it looks like local competition got too much for them.

 

[Wrought]

Bloomberg is reporting that state banks might be tapped to support local governments.

China is preparing to tackle the significant backlog of unpaid bills owed by local governments to the private sector, according to people familiar with the matter, an amount of arrears some have estimated at over $1 trillion. The government is considering asking state lenders and policy banks including

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to lend to local authorities so they can make the payments in arrears, the people said, asking not to be named because the matter is private. The amount of money under discussion would plug at least 1 trillionyuan ($140 billion) of debt owed to private companies in the first phase of a longer-term initiative, one of the people said. Officials aim to complete the task by 2027, according to the people.

President Xi Jinping

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in a February speech made public last month that the government’s delayed payments to companies risks undermining people’s trust in the authorities. Underscoring the importance Beijing is placing on the issue, China’s top leader said unpaid bills could “cripple” affected businesses in the embattled private sector and was hurting “society at large.” While the proposed assistance would offer relief to private-sector contractors, it would shift more risk onto state banks that already face rising loan losses.

I think this is the key takeaway here. Local governments gave informal guarantees and are now struggling to make good on them. Bringing those under-the-table promises onto formal balance sheets boosts transparency and accountability while not letting them off the hook. Central government is giving short-term relief in exchange for greater leverage over local affairs. Politically, economically, and financially shrewd move.

In recent months, authorities have instructed the nation’s major banks to provide support for the initiative, including asking them to give short-term liquidity loans to regional governments to settle overdue bills tied to their affiliated entities, people familiar said. While such debts are typically not owed by the local governments, they are responsible for repayment because they are backing the entities in debt.

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[Wrought]

MoF released a summary of 14th FYP achievements today. Lots of details and numbers, but what stood out to me was that 60% of LGFV have now been wound down as of H12025. Huge reduction in hidden debts. One presumes it's been brought formally onto local government balance sheets after suitable writedowns. Imposing fiscal discipline is painful and politically fraught, so it's gratifying to see such progress.

化债是手段，发展是目的。我们坚持化债和发展两条腿走路，有效推动经济发展和债务管理良性循环。一是增强了地方发展动能。化债打通了资金链条，地方腾挪出更多的资金资源、时间精力和政策空间，用于解决经济发展的堵点、痛点和难点。二是推动了融资平台加快退出。截至2025年6月末，超六成的融资平台实现退出，意味着60%以上的融资平台隐性债务已经清零，融资平台改革转型加快推进。三是改善了金融环境。金融机构资产质量得到改善，风险显著降低，对实体经济的信贷投放意愿和能力明显增强。​

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[henrik]

LEADING COUNTRIES IN MANUFACTURING​

 

[StraightEdge]

I think very important policy directives. And coming from Xi means a lot.

https://twitter.com/i/web/status/1967495146423177260