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Shanghai Macro Strategist

@shanghai_macro

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China strategist. Author of bi-weekly China Macro Watch. Mission: bridge the information gap between the East and the West. Contact: shanghaimacro @gmail .com

Joined December 2009
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
Rumors are just for fun. What ultimately matters is facts-and-data-driven research based a solid analytical framework. If you are a sophisticated investor and interested in my investment-oriented China research, please direct message me and we will go from there. Thanks!
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
The 10-year yield spread between China and the US - the world's two largest economies - has dropped to the lowest point since mid-2002, effectively a two-decade-low. If this is not a regime shift for the global economy, I don't know what is...
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
This is probably one of the most important charts right now about the Chinese economy. To offset the collapse in the real estate sector,Beijing has managed to surge credit to the manufacturing sector, which has helped prevent a total collapse of domestic credit growth and demand
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
This may be another thought-provoking chart related to my last post. The Green China, Inc. has risen to a point where its total exports of clean energy products have almost catched up with its oil imports. A critical question now is: Will China want higher or lower oil prices?
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
In the first 5 days of holiday: Railway traffic up 24.7% vs 2019. Airway traffic up 10.9% vs 2019. While this is good news in the near-term, such revenge traveling actually brings a risk that tourism spending falls sharply next year, especially if household income remains weak.
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
This loss looks paltry compared with the carnage in Chinese green energy stocks. From the peak: Longi -66%; Sungrow -54%; Ginlong -76%; Goldwind -57%; CATL -52%； The overcapacity in China's green industry is severe, which has led to a complete crash in prices and earnings.
@Schuldensuehner
Holger Zschaepitz
@Schuldensuehner
1 year
WTF? It looks like there aren't that many winners in the green energy transition. Siemens Energy falls as much as >30% to a fresh All-Time Low as the wind turbine firm seeks state guarantees. Wind-turbine unit stopped taking orders for certain platforms. Net losses, cash flows
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
Either Beijing will be forced to return to the old model - which is partially the case now given property easing - or it needs to adopt unconventional tools that strengthen the consumers. If property stimulus no longer works, the latter seems to be the path of least resistance.
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
Foreign investors have sold a total of 100bn yuan worth of A shares over the past 30 days, the largest on record. Besides recent media headlines, this relentless selling has confirmed the extreme investor pessimism - more bearish than in last Oct. - over Chinese risk assets.
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
The PBoC balance sheet now looks too small compared with China's gigantic debt load. As the PBoC has increasingly relied on claims on domestic institutions for BS expansion since 2015, essentially it means China has lagged other major economies in the game of debt monetization.
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
11 months
It is no exaggeration to say that China's geopolitical risk premium may have collasped over the past 24 hours: 1. Biden-Xi meeting is about to occur. 2. A joint ticket is forming in Taiwan that may defeat the pro-independence DPP. Incredible development!
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Taiwan’s opposition parties to work together for January election

The Kuomintang and Taiwan People’s Party will run a joint ticket in a bid to beat the ruling DPP’s William Lai.

www.aljazeera.com
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
The tightening of financial conditions in China as a result of rising bond issuance amidst PBoC’s reluctance to further ease policy has culminated in a spike of overnight interbank rate to as high as 50% today, causing a huge panic in the money market.A RRR cut is likely to come
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
This is an interesting development that few people seem to pay attention to. No matter how one reads the 21 measures, it does not seem that Beijing is ready for a geopolitical adventure in the foreseeable future. This is a pretty dovish guideline on Taiwan
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China Releases New Measures For Taiwan 'Integration'

China outlined on Tuesday a raft of measures for strengthening integration with Taiwan, in an indication that Beijing aims to expand links with the self-ruled island that were severed during the...

www.barrons.com
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
A critical development.
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
In fact, the selling by foreign investors has been so intense that many onshore investors have stopped buying for the fear of further foreign liquidation. According to the PBoC, foreign institutions still owned a total of 3.3tn worth of mainland equities by the end of June.
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
For example, Chinese production of solar cells and EVs have absolutely gone through the roof.
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
1/ A bit more than a year ago I left my "safe" job to focus full-time on investing; what I truly enjoy. Despite being active at Best Anchor Stocks for all this time, I regularly come across people who have no idea about this project, so let me explain it briefly!
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
The readout of Foreign Minister Wang Yi’s meeting with President Biden suggests that President Xi will travel to San Francisco for the APEC Summit in Nov. “Based on the political consensus reached in Bali, (we) face towards San Francisco.” This is indeed a major improvement
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
11 months
This is a counterpoint from the PBoC back in 2019. The value-add of financial sector is high in China due to: 1. High savings rate. Banks need to turn massive savings into investment 2. Direct financing is limited 3. Value-add does not take systemic risks into consideration
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
This chart cogently explains why the commodity complex has remained resilient despite China's property collapse. One thing I kept hearing from onshore managers is that commodity demand from the manufacturing sector, especially those related to green economy, has remained strong.
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
In fact, Beijing has fully recognized that the old, investment-led model was broken many years ago, which led to the deleveraging campaign since 2017. It is due to such realization that Beijing has refrained from bazooka stimulus over the past few years
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How China can avoid the Japan trap

Income needs to accrue to those who will spend it — but this will require redistribution on a significant scale

www.ft.com
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
This is THE takeaway from the widely-watched event. With this in mind, it is not difficult to understand President Xi’s recent visit to the PBoC. It was to ensure that major financial institutions listen to the Party and reposition their role in the new hierarchy.
@Lingling_Wei
Lingling Wei 魏玲灵
@Lingling_Wei
1 year
Beijing has changed the name of its twice-a-decade financial confab to “the Central Financial Work Conference” from “the National Financial Work Conference.” Leaves no doubt who’s in charge: The Party center now oversees a sector seen as the economic lifeblood of the country.
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
Well, it depends on how you define "China." Taiwan authorities assassinated Henry Liu, a vocal critic of the KMT and a naturalized US citizen, on the US soil in 1984. The incident caused a major diplomatic backlash and led to the dissolution of the military-intelligence complex.
@DerekJGrossman
Derek J. Grossman
@DerekJGrossman
1 year
China has never assassinated anyone on US soil, as far as we know. India may have assassinated a Canadian citizen on Canadian soil. Outrageous.
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
11 months
Because the world is multipolar and bifurcating global trade is not realistic, third-party countries have been able to take advantage of US-China tensions and reap the benefits. The realization of such constraint may explain why the US and China are re-engaging with each other.
@robin_j_brooks
Robin Brooks
@robin_j_brooks
11 months
If you believe in US decoupling from China, take a look at Mexico's trade balance. Exports to the US (blue) are up massively, reflecting a big rise in imports from China (red). There is no trade decoupling. China is just sending its goods to the US on more circuitous routes...
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
11 months
This is why many onshore thinkers believe that a pro-Russia stance will allow China to notably strengthen its energy and food security. Moscow was quite reluctant to send discounted gas to China before 2014. Two wars effectively solved that problem.
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Exclusive | Test to ‘no limit’ ties as China wields ‘bargaining power’ over Russian pipeline

Construction of the Power of Siberia 2 natural gas pipeline is likely to be slower than expected despite the ‘no limit’ strategic partnership between Beijing and Moscow.

www.scmp.com
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
11 months
According to Syntun, the total e-commerce sales of the 2023 Singles Day (Nov. 11) were 277bn yuan, which was nearly 10% lower than last year’s 307bn. The retreat of consumption pent-up demand seems already underway, bringing the risk of a double dip in the economy.
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
11 months
Sorry to pour some cold water. But the property data released today is DEEPLY UNNERVING. Despite a brief stabilization in Sep., property prices have again started falling notably Even in Tier-1 cities: New housing prices down 0.3% mom Second-hand property prices down 0.8% mom
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
An interesting debate to follow, although there may never be a “correct answer.”
@michaelxpettis
Michael Pettis
@michaelxpettis
1 year
Zongyuan Zoe Liu and I separately respond to and disagree with Adam Posen's August piece in Foreign Affairs, "The End of China’s Economic Miracle", after which he responds to us. I don't think this disagreement has been resolved. via @ForeignAffairs
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
11 months
The joint ticket collapsed, indicating both KMT and TPP still care about their own political interests more than the shared goal of defeating DPP. But why publicly announcing the cooperation a week ago without even reaching a strong political consensus…
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China ties on the line as Taiwan opposition splits in dramatic feud

Taiwan's opposition parties, which seek closer China ties, registered separate presidential candidates on Friday after a dramatic split, potentially easing the way for the ruling party, which has...

www.reuters.com
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
15 years
Rupa and The April Fishes – 2008 – Extraordinary Rendition http://bit.ly/5YXiS4
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@shanghai_macro
Shanghai Macro Strategist
@shanghai_macro
1 year
What is happening right now is that Beijing has been determined to move away from the old model without first putting in place a new one. It is thus not a surprise that this interregnum has been so painful. But at the end of the day, there are limits to pains…
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