Real Estate Boomlet Ending, Now What?

There is a claim that supply side reforms are helping to slow the economy, but:

Bloomberg: China’s Closing Coal Mines Too Slow to Meet Capacity-Cut Targets
China urged state-owned coal producers to accelerate mine closures in order to meet year-end targets as part of President Xi Jinping’s drive to curb industrial overcapacity.

The country’s cuts are behind schedule, with about 95 million metric tons of capacity reduced by the end of July, or 38 percent of the annual target of 250 million tons, the National Development and Reform Commission, the country’s economic planner, said in a statement on its website on Thursday.

Coal companies in major coal-producing provinces including Shanxi and Inner Mongolia have no plans to execute their coal-capacity reduction work until the last quarter, which could put the annual reduction target at risk, NDRC said.
Earlier I posted Hebei Province Cuts Steel Overcapacity, Increases Production

Investment has fallen, but private investors were actually increasing their share of investment in primary industry and holding steady in manufacturing as of April. See: Why Did Private Investment Collapse? Private Investors Fled Public Projects. The narrative on the slowdown being a supply side reform story rings hollow. It is instead a story of private investment pulling back and government stepping up in its place, but now the effect is wearing off as credit growth slows and the government cracks down on land sales. Land sales are a source of infrastructure investment capital, and the total value of land sales in July 2016 was 5 percent below the total in July 2015. SOEs had been pouring money into land, but they stopped in July (See: Reform Can Wait: 4 Trillion Stimulus All Over Again as SOEs Pour into Land Market and Ministry of Finance Owned Cinda Real Estate Becomes Land King)

Even if the slowdown in real estate is isolated, there's no evidence of a significant pick-up elsewhere to offset this decline. There are plans to spend on infrastructure (Local Govts to Spend Trillions in Second Half Infrastructure Push), but those efforts could be restrained if land sales do not pick up.

There's also this narrative reported by Reuters: China's economic activity slows in July as reforms begin to bite
"People are worried about a lack of solid demand over the next few years so they aren't really investing, especially in capex, which is the driving factor of the slowing investment," said Zhou Hao, Senior Emerging Markets Economist at Commerzbank in Singapore.

While China's consumption remains strong, investment and net exports are slowing, with the government likely to boost headline growth through fiscal policies.

...David Qu, markets economist at ANZ in Shanghai, said while weak industrial activity is a sign of poor economic health, China is unlikely to use monetary policy to restore growth.

"Although economic activity isn't very good, due to the need to continue to get rid of overcapacity, there's not a lot of room to ease," said Qu.
On the bold part: consumption is the last to weaken. The slowdown in investment heralds slower growth in the future, one that will eventually reach consumption as well.

China's behind a rock and a hard place. As Qu says, printing money doesn't really help. All it did in 2016 was generate a real estate boomlet for a few months, which the government then had to shut down. The rise in commodities is already pushing up production and causing companies to delay overcapacity cuts. Even if China wants to ease monetary police, the U.S. election, SDR inclusion and G20 meetings loom. Easing monetary policy will put downward pressure on the yuan and could force the PBoC to pay up to maintain yuan stability. The window of policy options is rapidly closing for China.

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