End of the China bull?

[Uncle Festivus]

There appears to be emerging signs that China has not de-coupled from the rest of the worlds problems. Internal rampant inflation and pressure on food supplies from a cold snap may temper the rate of growth, with local implications/ramifications for Australia?

Food commodities the next/current global bull market perhaps?

Feb. 1 (Bloomberg) -- Manufacturing in China, the world's fastest-growing major economy, cooled in January as growth in shipments overseas slowed.
The Purchasing Managers' Index fell to 53 from 55.3 in December, the China Federation of Logistics and Purchasing and the National Bureau of Statistics said today in an e-mailed statement. A CLSA Asia-Pacific Markets PMI index slipped to 53.2 from 53.3.
Exports grew at the slowest pace since 2002 in the fourth quarter, indicating that recent yuan gains, the cooling global expansion and cuts to some export-tax incentives are biting.

A serious threat to Chinese food supplies with recent severe cold & snow storms.

BEIJING (AP) -- A top agriculture official warned Thursday that snow battering central China has dealt an "extremely serious" blow to winter crops, raising the likelihood of future shortages driving already surging inflation.Regions hit by the worst winter storms in 50 years provide the bulk of China's winter fruit and vegetable production, Chen Xiwen, deputy director of the Communist Party's leading financial team, told reporters.
The full magnitude of the losses was unclear and much depended on the weather, he said.
"The impact of the snow disaster in southern China on winter crop production is extremely serious," Chen said. "The impact on fresh vegetables and on fruit in some places has been catastrophic."

China's products to be less competitive?

Jan. 30 (Bloomberg) -- The yuan rose to the highest since the end of a link to the dollar in 2005 on speculation the worst snowstorms in five decades will exacerbate inflation, paving the way for faster currency gains. Bonds advanced.
The currency rose for a sixth day as the heaviest snowfall since 1954 destroyed 4.2 million hectares of farmland and strained supplies of food and coal. China is willing to use the yuan's exchange rate to help slow inflation, which is double the central bank's annual target.

And the share market fails the re-test?

 

[tradingforwealth]

I thought we are mainly affected by commodities and from China buying them from us, they got heaps of cash reserves and they haven't finished building their cities.

The chinese government didn't want BHP and RIO to merge as they could have more power.

Anyway, BHP has in most of their announcements that they expect this commodity boom to last for 10-20years more.

 

[Uncle Festivus]

The Chinese trifecta -

1 - currency appreciating,
2 - global demands slowing down, and
3 - production costs increasing

and.....inflation.

BEIJING, Feb 3, 2008 (Xinhua via COMTEX) -- The purchase management index (PMI) of China's manufacturing industry fell from 55.3 in December 2007 to 53 in January 2008, indicating China's economic movement will be slowed down in the next few months, said Lehman Brothers.

Meanwhile, China's new export orders index dropped sharply from 54.4 to 49, a record low over the past three years.

Lehman Brothers said the phenomenon represents that China's export growth will go at slower paces in the next two or three months, under the circumstance of currency appreciating, global demands slowing down, and production costs increasing.

It also predicted that the month-to-month trade growth in China's mainland will go down apparently in the first quarter, due to the snow disaster that interrupted communication, energy and food supply, and closed some factories. That may make the actual industrial production and export data lower than PMI.

BEIJING, Feb 3, 2008 (Xinhua via COMTEX) -- Heads of China's export-oriented manufacturing companies are feeling the pinch of the spreading US subprime crisis, the downward adjustments of export rebates, and the increasingly stronger Renminbi.

The January Procurement Manager Index (PMI) published on Feb. 2 by China Federation of Logistics and Purchasing (CFLP) stands at 53.0 percent, 2.3 percentage points lower than previous month. And among all sub-indices, the one for export orders for the first time over the past three years decreased.

Manufacturing PMI comprises a basket of sub-indices. It indicates an expansionary economy if the reading is above 50 percent, and a recession if below.

All the sub-indices except the one on inventory, which saw slightly rise in January, are all lower by varied degrees than the December 2007 ones, with the largest drops recorded in the indices on production, new orders and new export orders, whose decreases respectively reaching 3.4, 4.4 and 5.3 percentage points.

Notice should be given to the fact that the index on new export orders fell below 50 percent for the first time since January 2005.

Also according to CFLP, sectors as electronics, nonferrous refining, chemicals, fiber and plastics, textile and non-metallics, among the 20 sectors categorized under manufacturing industry, all registered PMIs lower than 50 percent.

 

[Wysiwyg]

I thought we are mainly affected by commodities and from China buying them from us, they got heaps of cash reserves and they haven't finished building their cities.

The chinese government didn't want BHP and RIO to merge as they could have more power.

Anyway, BHP has in most of their announcements that they expect this commodity boom to last for 10-20years more.

Hi there, so where is the "heaps of cash" coming from and what do you think China will be exporting after the "expansion" has subdued?
Do you think one day we will hear from China ... sorry folks, we`re out of yen.

 

[roland]

It's been a while since I was in China - around 6 years or so. I have been there 4 times, each time a year or 2 apart. Each time the changes were dramatic - just amazing at how quickly a city of apartments can be erected, seemingly using nothing but bamboo scafolding and manpower.

The extreme poverty in many country areas in contrast with the extreme cash wealth of China is an obvious sign to me that China still has a long way to run.

They make just about everything in the world, and the world continually empowers their factories to continually pump out manufactured goods from other's natural resources.

Nothing is going to stop China, they are not even a small percentage ahead in thier growth expectations. If someone has something they can dig up and send to China to buy back at value added prices, then it is all smooth sailing for their growth. The US is dead - look out for the new China!

 

[Wysiwyg]

They make just about everything in the world, and the world continually empowers their factories to continually pump out manufactured goods from other's natural resources.

Nothing is going to stop China, they are not even a small percentage ahead in thier growth expectations. If someone has something they can dig up and send to China to buy back at value added prices, then it is all smooth sailing for their growth. The US is dead - look out for the new China!

You are assuming the rest of the world want to buy the stuff.I reckon quality will sell more than quantity.But i suppose the poorer in their country will soak up the surplus products.

 

[roland]

You are assuming the rest of the world want to buy the stuff.I reckon quality will sell more than quantity.

Wysiwyg, I guess you are not in the frontline of the retail trade...? We continually try and promote "quality" products, but are continually frustrated with the majority of people buying on price.

....and, guess what, the higher cost "quality" products are generally also made in China

 

[Wysiwyg]

Wysiwyg, I guess you are not in the frontline of the retail trade...? We continually try and promote "quality" products, but are continually frustrated with the majority of people buying on price.

....and, guess what, the higher cost "quality" products are generally also made in China

Yes roland, you are right, i don`t sell things.What products of quality do you mean please?

 

[numbercruncher]

The US is dead - look out for the new China!

Yes big call, Im always buying made in China sometimes by choice and sometimes because of no choice, price AND quality seal the deal.

US products are getting cheaper, I would and will never buy food from China but have absolutely no problem buying US food. My new Lawnmower is made in the US. If I could choose made in US over made in China for comparable prices I would choose US and im sure more than 50pc of Australians would agree. I also have no problem paying double for items that last twice as long regardless of point of manufactor.

China is going to come up against more competition. She needs to do work on Quality rather than quantity imho.

The US has alot of fight left in her, new direction will hopefully be found under new leadership.

Such comments about the US have me wondering if its nearly time to invest their, not quite im thinking, bit more to fall yet

 

[Freeballinginawetsuit]

Yes roland, you are right, i don`t sell things.What products of quality do you mean please?

What rock do you live under? .

Plz name something that isnt, and just to be picky it cant have a component/textile/plastic yada yada in its manufacture..... chinese sourced.

 

[Wysiwyg]

What rock do you live under? .

Plz name something that isnt, and just to be picky it cant have a component/textile/plastic yada yada in its manufacture..... chinese sourced.

I got a pair a strides made in China, but most of my electronic stuff and car is made in Australia, Japan, Korea.Bring on the Chinese car manufacturers say what.:

Home >> Business
UPDATED: 11:01, June 25, 2005
First made-in-China cars sent to Europe

Japan's car-maker Honda Motor Co Friday started to ship its made-in-China cars to Europe with Germany as the first destination.
This is the first time cars have been exported from China to Europe.
Honda plans to export 10,000 units of the Jazz hatchback to Europe this year, it said.
The 1.2- and 1.4-litre Jazz is being made at Honda's joint venture in Guangzhou with the Guangzhou Automobile Corp and Dongfeng Motor Corp

.

 

[Wysiwyg]

Plus it might be hard for China to lose that "low quality" tag...1997 ...

In 1800 China accounted for 33 percent of world manufacturing output; by way of comparison, Europe as a whole was 28 percent, and the United States was 0.8 percent. By 1900 China was down to 6.2 percent (Europe was 62 percent, and the United States was 23.6 percent). In 1997 China accounted for 3.5 percent of world GNP (in 1997 constant dollars, the United States was 25.6 percent). China ranked seventh in the world, ahead of Brazil and behind Italy. Its per capita GDP ranking was 81st, just ahead of Georgia and behind Papua New Guinea. Taking the most favorable of the now-dubious purchasing-power-parity calculations, in 1997 China accounted for 11.8 percent of world GNP, and its per capita ranking was 65th, ahead of Jamaica and behind Latvia. Using the U.N. Human Development Index, China is 107th, bracketed by Albania and Namibia -- not an impressive story.

2008 ....

China's economy has grown dramatically in the last decade: it is more than twice as large as it was ten years ago. This spectacular rise means that Beijing can influence the global economy today in ways that would have been unimaginable in the 1990s -- a development that has led to widespread concerns in the United States. Many officials in Washington and small U.S. manufacturing companies allege that Beijing has deliberately undervalued its currency and manipulated markets in order to promote the growth of its exports.

 

[So_Cynical]

Yes big call, Im always buying made in China sometimes by choice and sometimes because of no choice, price AND quality seal the deal.

Everything is made in china now...even good stuff, but mostly theres just no choice...LCD monitors is a good example..all made in China.

US products are getting cheaper, I would and will never buy food from China but have absolutely no problem buying US food.

What US food?..Woolworth's has been selling frozen Chinese veggies for a while now...home brand and others...carrots, broccoli etc etc, most people have no idea....they don't read the contents labels, even Nabisco, Ritz biscuits are made in China.

 

[numbercruncher]

Everything is made in china now...even good stuff, but mostly theres just no choice...LCD monitors is a good example..all made in China.

The car I drive isnt, the road I drive on isnt, the food on my table isnt, the fuel I use isnt, the plane I fly on isnt, the power I use isnt, the house I live in isnt etc etc, I know Chinese commerce is huge but it isnt about to take over the financial world.

I hope China continues to do well, she will be up against tough competition in the future im certain. A huge aging population is just one thing, Internal price pressures another, India will provide big competition. Falling value of the USD is more competition.

Competition is great!

Finally, I love Chinese food, but ill never trust made in China food, I wish them good luck changing my and many others minds on that Id pay 100pc more for Aussie made, Id grow my own if there was no alternative! Each to their own though

 

[Lucky_Country]

Just the start of the China bull.
Internal demad is the biggest growth story not exports.
Oh and dont forget India

 

[So_Cynical]

The car I drive isnt, the road I drive on isnt, the food on my table isnt, the fuel I use isnt, the plane I fly on isnt, the power I use isnt, the house I live in isnt etc etc, I know Chinese commerce is huge but it isnt about to take over the financial world.

All true and backs up my original comment...."everything is made in china" however its only economical to export almost everything here....wouldn't surprise me if the Chinese were able to export pre cast road sections one day. Honda makes cars there.

Just the start of the China bull.Internal demad is the biggest growth story not exports.
Oh and dont forget India

Everyone underestimates the domestic demand in china.

 

[>Apocalypto<]

There appears to be emerging signs that China has not de-coupled from the rest of the worlds problems. Internal rampant inflation and pressure on food supplies from a cold snap may temper the rate of growth, with local implications/ramifications for Australia?

Food commodities the next/current global bull market perhaps?

A serious threat to Chinese food supplies with recent severe cold & snow storms.China's products to be less competitive?



And the share market fails the re-test?

I have been in China for he last four days, hell yeh it's freezing! but there is no problem getting food. the snap has seemed to have ended. I have had a couple wicked snow fights with the locals! came off second best to a couple kids!

as for the worry about there economy, inflation is a real problem now, prices have risen a lot since 2004 my first trip. as for there being cracks that could lead to disarster i doubt it, there are over 1 billion people in this country so the local market can take up a fair amount of the slack. but if all the orders did stop there would be quite a few out of work! but i don't think the place would just stop. Have they decoupled hell no they are more connected to the credit crunch then most think, but they have the cash reserves to see them though.

things are really amazing here, its all man power. all the highways froze up covered in ice so thousands of people all went out and shoveled the snow, the army was also working day and night to keepthe roads clear.

 

[Uncle Festivus]

....and more inflation.....

The Reserve Bank thought it had a problem

Feb. 19 (Bloomberg) -- China's inflation accelerated to the quickest pace in more than 11 years after the worst snowstorms in half a century disrupted food supplies.
Consumer prices rose 7.1 percent in January from a year earlier, the statistics bureau said today, after gaining 6.5 percent in December. That was more than the 7 percent median estimate of 23 economists surveyed by Bloomberg News.
Food prices soared 18 percent after blizzards paralyzed transport systems and destroyed crops. The government faces the challenge of curbing inflation without derailing the expansion of the world's fastest-growing major economy.
``Inflation is likely to have further legs to run even after the snowstorm effects subside because of fast growth in money supply,'' said Liang Hong, senior economist at Goldman Sachs Group Inc. in Hong Kong. February's rate ``might even get close to double-digit levels.''

"fast growth in money supply" - I thought that was a capitalist tradition, looks like the commo's have stolen that as well

Feb. 19 (Bloomberg) -- China's central bank said it will increase innovation in monetary-policy tools after a report showed that inflation surged to an 11-year high.
China's economy faces ``prominent'' problems such as imbalanced international payments and excess liquidity, the People's Bank of China said. The comments were in a five-year plan for the finance industry released today on the central bank's Web site.
``We will further improve monetary policy controls, continue to use quantitative measures, widen usage of price- related policy tools and increase innovation in monetary policy measures,'' the central bank said in the report, without elaborating.

The chart - support holding - for now?

 

[dhukka]

....and more inflation.....

The Reserve Bank thought it had a problem

"fast growth in money supply" - I thought that was a capitalist tradition, looks like the commo's have stolen that as well


The chart - support holding - for now?

Unc, check out this interview on Bloomberg yesterday with the CEO of Asianomics. Paints a very sobering picture.

 

[Uncle Festivus]

Unc, check out this interview on Bloomberg yesterday with the CEO of Asianomics. Paints a very sobering picture.

Interesting, thanks for that. It appears the Chinese authorities are even more behind the curve than I thought. I wonder how "innovative" they will be?