Key data out Wednesday suggested the Chinese economy remained under pressure in November as property curbs, regulatory tightening and virus containment measures continued to stifle and otherwise weigh on activity.
Retail sales grew just 3.9% YoY last month (figure below), well short of the 4.7% economists expected. The lowest estimate, from 30 forecasters, called for a 4% gain.
The lackluster read on consumption made for a rather stark juxtaposition with robust import figures for November.
Industrial output rose 3.8%, a bit better than expected, but still subdued.
Fixed-asset investment, a focal point amid the tumult in the property sector, was short of estimates. Property investment slowed and the surveyed jobless rate ticked higher, although scarcely anyone watches that figure.
The National Bureau of Statistics described the global environment as “increasingly complex and grim” while warning that “there are still many constraints on the domestic economic recovery.”
Beijing is in the process of orchestrating a policy pivot aimed at supporting growth and preventing additional spillover from the meltdown among developers. Both Evergrande and Kaisa were declared in default last week, and the market’s attention recently turned to Shimao Group, which saw its bonds and shares plummet amid liquidity concerns.
On Wednesday, reports indicated that the local government in Haikou city seized eight land sites from Hengda Real Estate, Evergrande’s principal onshore property business.
China cut RRR last week in a move officials attempted to pitch as a “regular operation of monetary policy” as opposed to the onset of an easing campaign. And yet, on Wednesday, an article in the Securities Times suggested the PBoC may cut the MLF rate imminently, presaging the first loan prime rate reduction in 20 months. Ultimately, the PBoC rolled just over half of maturing MLF funding. The rate was unchanged.
Meanwhile, a Hong Kong study showed Coronavac, the widely distributed Sinovac vaccine, provides no protection at all against Omicron infection. The sample size was small (25 people), but the results were alarming. “Only five out of 25 BioNTech vaccine recipients had neutralizing ability against the Omicron variant, and the vaccine efficiency was significantly reduced to 20-24%,” researchers said, adding that “none of the serum of the 25 Coronavac vaccine recipients contain sufficient antibodies to neutralize the Omicron variant.”
Finally, China got a double-dose (pardon the unintentional vaccine pun) of bad news from the US, where lawmakers moved ahead with legislation to punish Beijing for human rights abuses in Xinjiang, while the Biden administration was said to ponder fresh measures against SMIC, the country’s largest chipmaker.
As Bloomberg’s Simon Flint put it, it was a “bad news day” for China watchers.
