There have been better starts to the New Year. The December Caixin Manufacturing PMI, a survey of Chinese manufacturing activity, contracted for the first time in 17 months. Soon after, reports began to emerge that China’s growth target will be lower than that set for 2018. Apple, once the world’s most valuable company, sent shock waves across financial markets. It revised down its earnings for the end of 2018 citing an economic slowdown in China that was significantly greater than they had anticipated due to weak demand and the impact of trade tensions with the US. While the dispute with the US has undoubtedly affected sentiment, with December data showing trade to the US weakening, over most of last year Chinese exports to the US were actually very strong. Exports to the US grew 11% in dollar terms in 2018 and it was government efforts to rein in the growth of credit that had a greater direct impact on the economy. As liquidity tightened last year sales of real estate and automobiles turned negative as companies and individuals found it harder to borrow money. The chart below shows that as credit – represented by Total Social Funding – tightened last… continue reading
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Source: CTRM Center