The news and analysis about economic conditions in China has turned decidedly negative of late after the latest round of key indicators – GDP growth, imports, fixed asset investment and industrial output – showed signs that a broader slowdown could be coming.
The discussion has had a very short-term focus, while the Beijing government has taken a longer view by taking some of the hot air out of the property sector to head off the kind of 2008-09 bust that dragged down the U.S. and Western European financial sectors and eventually their economies.
Others (including us) also take a longer view – here’s a sampling of analysis that doesn’t share the same dire outlook as is dominating the mainstream.
BCA Research: “Chinese banks’ total lending to the property sector has been increasing in recent years, but banks’ credit exposure to the property market is very low compared to other major economies. The large down payments of mortgage borrowers provides a significant buffer between banking sector assets and property prices.”
ISI China Research: “China’s fiscal revenue in the first seven months of this year was 26 percent more than those in 2009 or 2008… yet spending only increased 17 percent … the fiscal strength is impressive. Beijing will have a lot of fiscal ammo in (the second half of 2010).”
CLSA Asia Pacific Markets: “The upside of slowing data is that the potential for further tightening measures recedes even if Beijing is not yet ready for outright easing.”