2017-01-20

China Running Out of Dollars: PBoC Cuts RRR Again

Nothing has changed. The slow motion global dollar deflation is still underway. The odds of a large, one-time devaluation of the renminbi is increasing, not falling. The size of the eventual adjustment is growing as well.

Alhambra: China RRR: Surprise But No Surprise
In July 2015, just before everything broke, PBOC funding of the Big 4 State-Owned Banks was less than RMB 100 billion. As of the latest figures for December 2016, it was RMB 1.17 trillion.

...The RMB is flowing outward from the central bank, but money markets are increasingly starved of funds.

With the New Year holiday approaching, the PBOC stunned the mainstream by reducing the RRR for five of China’s largest banks today, and doing so by a full percentage point. The unconfirmed reports that I saw suggested this was only a temporary measure, in addition to another 28-day funding conduit that was just added for “major commercials”, but it doesn’t make any sense given the trillions in RMB already flowing unless you take account of that “something” else.
Straits Times: China cuts reserve ratios for 5 big banks temporarily amid cash squeeze
China has allowed its five biggest banks to temporarily lower the amount of cash that they must hold as reserves, to ease seasonal liquidity tightness amid huge cash demand heading into the long Lunar New Year holiday, three sources with direct knowledge of the matter said.

The People's Bank of China (PBOC) has cut the reserve requirement ratio (RRR) for the banks by one percentage point, taking the ratio down to 16 per cent.

It will restore their RRR to the normal level at an appropriate time after the holiday, according to sources.

"This is a temporary adjustment, and is mainly in response to the cash withdrawal, tax payment and reserve payment. (The RRR) will go back to the normal rate after the Lunar New Year holiday," one source said.
The PBoC made a similar move in 2015. WSJ: China Cuts Reserve Requirement Ratio

Ren Zeping: Housing Adjustment into 1H2018

Ren Zeping: structural opportunities in the stock market, housing prices continue to adjust

Founder Securities chief economist and co-director of the Institute Ren Zeping

2017 stock market will turn from performance buffalo cattle, there is no index-level opportunities, but the structural opportunities are more, will revolve around the reform and performance of the two main lines. House prices will be adjusted to the end of 2017 or 2018. RMB overvaluation will continue to be revised.

Dear 21st Century Business Herald Readers:

Looking ahead to 2017, I expect GDP to grow by around 6.5% and CPI to grow by around 2%. The economy will bottom twice in the second quarter, but the callback rate is not deep. Inflation peaked in the first quarter, but the year in a mild inflationary environment.

...Housing market, the current round of price adjustment may continue until the end of 2017 to 2018 in the first half, the key to look at long-term mechanism. As the current regulation is mainly through the purchase and purchase of credit control needs, if the land supply can not keep up and long-term mechanism is not ideal, the end of 2017 to the first half of 2018 housing prices facing a new round of upward pressure. If the long-term mechanism can be established, there are still turning.
Caijing: 任泽平:房价调整持续到2018年上半年 关键看长效机制

Still No Sign of Private Service Sector in FAI

SOEs Still Pulling FAI Higher in December

Fixed Asset Investment, Private FAI Steady in December

Real Estate Investment Jumps to 11.1pc Growth in December

Real estate investment growth finished on a high note in December, at the fastest monthly pace of 2016. It grew 6.9 percent for the full year.

2017-01-18

Chinese Media Calls Top in First-Tier Housing Market

iFeng: 证实了:特大城市亮出杀手锏!房价拐点来了
New Year, the property market has become the focus of public attention. Part of the real estate control policy continues to tighten, many hot city commercial housing chain volume dropped significantly. The industry said that the policy tightened with the previous Central Economic Work Conference proposed the establishment of long-term mechanism for the property market, the return of housing properties, to promote the healthy development of real estate echoes. The overall housing prices in 2017 is expected to be more stable or slightly down.

We're Gonna Need A Bigger Debt

iFeng: 今年赤字率预计仍保持3% 地方债规模适度扩大
Into 2017, in accordance with the central economic work conference tone, fiscal policy will shift to a more active and effective. Reporter learned that this year's fiscal deficit rate is expected to remain at around 3%, but the overall scale of local debt will be modest expansion.

Local debt replacement moderate expansion

According to the arrangements of the Ministry of Finance, in 2016 the scale of new local debt is 1.18 trillion yuan, which is nearly doubled compared to 2015. Among them, the general debt of 780 billion yuan, 400 billion yuan of special bonds. Replacement debt, the Ministry of Finance Wang Ke Bing, deputy director of the budget last year, has publicly stated that the year may be 5 trillion yuan of debt replacement.
I assume modest expansion of debt will be less than the nearly 100 percent increase in 2016?