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.

Please, Log in or Register to view URLs content!

 

[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

Please, Log in or Register to view URLs content!

and

Please, Log in or Register to view URLs content!

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

Please, Log in or Register to view URLs content!

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’

Please, Log in or Register to view URLs content!

and foreigners’ buying of the country’s

Please, Log in or Register to view URLs content!

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

Please, Log in or Register to view URLs content!

 

[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

Please, Log in or Register to view URLs content!

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

Please, Log in or Register to view URLs content!

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.

Please, Log in or Register to view URLs content!