"...improvements in productivity at Chinese firms, and willingness to accept lower margins" are maintaining their competitiveness.
- No Appreciation for the Rising Yuan, Heard on The Street in the WSJ - June 21.
"Despite the 18% rebound in May, most analysts believe [house] sales are dropping sharply." "Standard and Poor's expects property prices to fall by about 10% over the next 12 months, but it does not rule out a 'price war' if distressed selling by overstretched developers begins to feed on itself."
- Chinese Property - Popping the Question, The Economist - June 18.
"China's national debt narrowly defined is 20% of GDP, but if all obligations of the sovereign were added up it is closer to 80%. This is before this round of local government loan acquisition, and before considering the other 70% of the stimulus loans made to state enterprises, which history has repeatedly shown are bad credits."
- Beijing's Financial Day of Reckoning is Near, WSJ - June 21
"Using the social financing data released by PBoC for the first time, we find that credit penetration, including the previously opaque off-balance sheet financing, has risen sharply in China over the past two years. In fact, it is already above the critical levels of credit-to-GDP being >10% ahead of the long-term trend which has, as per econometric models of the Basel committee, led to banking sector stresses in many markets (Figure 12-15). This statistic is not visible if we simply use the on-balance sheet lending of the banking system."
- Credit Suisse Downgrades Chinese Banks on June 20
