Phat Dragon the Chart Pack January 2014

8/13/2019 Phat Dragon the Chart Pack January 2014

1/101

1


2/101

China: the key messagesThe recovery exhibited a stop-start nature in the first half of the year. The tone of the data flow

shifted for the better in July and August though, with improved outcomes evident essentiallyacross the board. The good news culminated with the release of the Q3 national accounts,which reported decent gains in real and nominal growth. However, the month-of-Septemberdata showed signs that the recovery had peaked, with a loss of momentum in both domesticand external demand entering Q4. The October & Novemb er da ta rounds co nf i rmed th is ,par t icu lar ly in re la t ion to f ixed in ves tment . As long anticipated, the pipeline is not beingreplenished with sufficient urgency to maintain current growth rates in infrastructure; newhousing controls are being imposed in tier 1 cities; and the lagged impact of lessaccommodative monetary policy (new credit has been soft in halve of last 6 months) will soonbe felt.

Phat Dragon updates his basic views as follows:

a) The low ceiling recovery-expansion plateaued in Aug-Sep.b) Year-ended growth rates will begin to decelerate in earnest as a modest loss of momentum

(deduced from the now less lean inventory position in heavy industry, plus a diminishedtailwind from the hefty early year credit supply) combines with less flattering base effects.c) Now that the Plenum is past and the NAO report on local government debt has beenreleased, cyclical policies will tilt more decisively towards tightening.

2


3/101

Key economic indicators

-10-50

5101520

25303540

-10-50

5101520

25303540

Real GDP Core IVA Steel Cement Exports Imports Real fixedinvestment

Housingsales

Auto sales

Dec-10 Dec-11

Dec-12 Nov-13

%yr

Sources: Westpac, CEIC. All indicators in volume terms except forimports and exports, which are nominal USDs.3mma of %yr rate for monthly data, quarterly otherwise.

%yr

3


4/101


5/101

China: some compositional fundamentals

3035

40455055

3035

40455055 %GDP%GDP Gross savings

Gross investmentServices output

Secondary output

Household consumption

15

25

35

45

-3036912

Current account (rhs)

Gross exports (lhs)

Gross imports (lhs)

5


6/101

Aggregate activity proxies

-15

0

15

30

45

-15

0

15

30

45

Dec-96 Dec-99 Dec-02 Dec-05 Dec-08 Dec-11

Central revenue Electricity productionM2 money supply Terrestrial freight

%yr %yr

Sources: CEIC, Westpac

6


7/101

Aggregate activity proxies: industry & exports

-30

-15

0

15

30

45

60

-15

0

15

30

45

Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13

Cement (lhs) Steel (lhs)Electricity (lhs) Exports (rhs)

%yr %yr

Sources: CEIC, Westpac.3mma of year-ended rates.

7


8/101

Aggregate activity proxies

0

5

10

15

2025

30

35

40

-40

-20

0

20

40

60

80


Construction starts

ImportsReal estate investment

%yr %yrSources: CEIC, Westpac.Data smoothed.

8


9/101

Central government VAT & IVA

-15

0

15

30

45

-15

0

15

30

45

Jan-97 Jan-00 Jan-03 Jan-06 Jan-09 Jan-12

VAT revenuesIVA

%yr %yrSources: CEIC, Westpac. 3mma.

9


10/101

Industrial production: core and headline

-10

0

10

20

30

40

50

-10

0

10

20

30

40

50


Core heavy industry

Headline industrial value-added

%yr %yrSources: CEIC, Westpac. 3mma.

10


11/101

Chinese electricity production

-15

0

15

30

45

-15

0

15

30

45


Contribution from other sourcesContribution from thermal generationElectricity production

%yr/ppt %yr/ppt


11


12/101

808590

95100105110

115120125130

Dec-99 Dec-02 Dec-05 Dec-08 Dec-115

10

15

20

25Nominal GDP growth (lhs)Business situation* (rhs)Domestic orders* (rhs)

Sources: CEIC, Westpac Economics.* 5000 enterprise survey.

% long run average%yr

China: business conditions, orders & GDP

12


13/101

35

40

45

50

55

60

65

35

40

45

50

55

60

65

Jun-92 Jun-96 Jun-00 Jun-04 Jun-08 Jun-12

net bal.net bal.Foreign orders

Domestic orders

Profitability

Sources: CEIC, Westpac Economics.

Corporate survey: order books and profits

13


14/101

35

40

45

50

55

60

65

35

40

45

50

55

60

65

Jan-05 Jan-07 Jan-09 Jan-11 Jan-13

indexindex

NBS new orders*

NBS new export orders*

Markit-HSBC new export orders

Markit-HSBC new ordersSources: CEIC, Markit. *Seasonally adjusted byWestpac Economics pre February 2011.

New orders & export orders: PMI measures

14


15/101

Steel inventory cycle: April 12 to Oct 13

-30

-15

0

15

30

45

60

0 3 6 9 12 15

inventories%yr

Sales%yr

15


16/101

Chinese domestic machinery sales

-50

-250

25

50

75100

125

150

175

200

-50

-250

25

50

75100

125

150

175

200

Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14

%yr%yrBulldozer Excavator Loader


A slow recovery in 2013after two weak years

16


17/101

Urban purchasing intentions: housing & cars

70

80

90

100

110

120

130

140

70

80

90

100

110

120

130

140

Sep-02 Sep-04 Sep-06 Sep-08 Sep-10 Sep-12

% average% averagePlan house purchase

Plan auto purchase

Sources: CEIC, Westpac Economics. All series expressed as a percent oftheir long run averages.

17


18/101

Urban consumer confidence: income

80

85

90

95

100105

110

115

120

80

90

100

110

120

Sep-02 Sep-04 Sep-06 Sep-08 Sep-10 Sep-12

%net bal

Current income confidence

Future income confidence

Sources: CEIC, Westpac Economics. All series expressed as a percent of

their long run averages.

18


19/101

Consumer saving/investment preferences

0

25

50

75

100125

150

175

200

60

70

80

90

100110

120

130

140

Mar-01 Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 Mar-13

% long runaverage% long runaveragePreference for savingsdeposits (lhs)Preference for activeinvestment (rhs)

Sources: CEIC, Westpac Economics. All series expressed as a percent oftheir long run averages.

19


20/101

Housing and auto sales

-50

-25

0

25

5075

100

125

150

-50

-25

0

25

5075

100

125

150


%yr%yr

Auto sales

Housing sales

Sources: CEIC, Westpac Economics. Autos are unit sales. Housing sales are by value.

20


21/101

Chinese housing sales by region

-50-250

255075100

125150175200

-50-25

0

255075

100

125150175200

Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15

%yr%yrCentre

East

West


21


22/101

Chinese construction activity

0

10

20

30

40

0

10

20

30

40

Jan 05 Jul 06 Jan 08 Jul 09 Jan 11 Jul 12 Jan 14

%yr%yr

Raw %yr

%yr 3mma%yr 12mma

Sources: CEIC,Westpac Economics.

22


23/101

The development of Chinas investment cycle

0

5

10

15

20

25

30

35

0

5

10

15

20

25

30

35

Real estate Manuf Transport Utilities Total

%ytd%ytd

Dec-11 Sep-12 Dec-12 2013H1 Nov-13

Sources: CEIC,Westpac Economics

Modestupswing

Stop start

Rail has peaked,overall growth

plateauing

Q3 reboundwill not amuse

BeijingModest

slowdown

23


24/101

Chinese investment: converging trajectories

-15

0

15

30

45

60

75

-15

0

15

30

45

60

75


%ytd%ytdTransport (12%)

Manufacturing (30%)

Utilities (7%)

Real estate (22%)


end 2009 shares of totalinvestment in ( ).

24


25/101

Contributions to Chinas investment growth

-6

-3

0

3

6

9

12

15


ppt

InfrastructureReal estate


Contribution to year-ended growth rate

25


26/101

Commercial & off market urban construction

-20

0

20

40

60

-20

0

20

40

60


%ytd%ytd Market res. (42%)Market non-res. (14%)

Non-market res. (8%)

Non-market non-res. (36%)

Sources: CEIC, Westpac Economics. End 2011 shares in parentheses.

26


27/101

State owned enterprises & fixed investment

15

20

25

30

3540

45

50

55

0

10

20

30

40

50

60

2005 2006 2007 2008 2009H1 2009H2 2010H1 2010H2 2011H1 2011H2 2012H1 2012H2 2013H1

ppt contSOE contribution (lhs)

Other contribution (lhs)SOE share of growth (rhs)Peak SOE share (rhs)

Sources: CEIC,Westpac.

peak share forSOEs (Jan/Feb 2009)

% share of growth

27


28/101

Investment projects by approver & by SOEs

-10

0

10

20

30

40

50

-10

0

10

20

30

40

50

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

%ytd%ytdSOEsCentral government

Local government


value of projects

28


29/101

New and ongoing projects

-30

-15

0

15

3045

60

75

90

-30

-15

0

15

3045

60

75

90


%yr%yr

on-going projectsnew starts

Sources: CEIC, WestpacEconomics. 3mma.

value ofprojects

29


30/101

Chinese infrastructure spending growth

28

2216

23

42

18

3

6

2218

-10

0

10

20

30

40

50

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

ppt cont.Other Other transport*HighwaysEnergyTotal

Sources: CEIC, Westpac.Contribution to full year growth. * Railways, airports, mass urban transit, pipeline, waterways.

forecast

30


31/101

Contributions to fixed investment growth

5.0 5.38.2

5.6 5.48.2 8.3

5.8 4.8 4.6

9.1 7.64.4

7.0

13.75.5

1.03.8

5.3 4.4

10.18.2 9.9 9.1

7.6

7.711.9

6.9 5.74.3

4.5

3.63.8

4.8

5.2

3.1 5.9

4.93.6

3.4

0

10

20

30

40

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

ppt cont.ppt cont. Other services & primaryManufacturingInfrastructureReal estate

Sources: CEIC, Westpac.Contribution to full year growth.

31


32/101

Major cities: rail network & population density

0

100

200

300

400

500

600

700

0 5 10 15 20 25 30

Sources: WestpacEconomics, OECD.

2012 figures.

1000 people per sqm

Rail track metres per sqmHongKong

ShanghaiGZNew

York

Singapore

Nagoya

Tokyo- Yokohama

Seoul-Incheon

Paris

Osaka-Kobe-Kyoto

London

CQNJBJTJ

WH DL

TaipeiSZ

32


33/101

China: existing and planned subways

0

100

200

300

400

500

600

700

800900

0

200

400

600

800

1000

1200

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

Track metresper sqmkms Planned (lhs)Underway (lhs)

Existing (lhs)

Eventual city density (rhs)

Beijing current density (rhs)

Eventual weighted density (rhs)

Sources: OECD, Westpac.

1 Fosham2 Wuhan3 Zhengzhou4 Guangzhou5 Fuzhou6 Shanghai7 Taiyuan8 Dongguan9 Shenyang10 Nanjing11 Tianjin12 Ningbo13 Xian 14 Shenzhen15 Nanning16 Chongqing17 Wuxi18 Beijing19 Harbin

20 Hangzhou21 Qingdao22 Nanchang23 Guiyang24 Dalian25 Suzhou26 Wenzhou27 Changchun28 Kunming29 Lanzhou30 Hefei31 Shijiazhuang32 Xiamen33 Chengdu34 Changsha35 Changzhou

33


34/101

Monetary and fiscal policy in China

-20

-15

-10

-5

0

5

10

15

-4

-3

-2

-1

0

1

2

3

Mar-97 Mar-01 Mar-05 Mar-09 Mar-13

% of GDPGap pptCredit to GDP gap (lhs)*

Fiscal position (rhs)

Sources: CEIC, Westpac Economics.* Bank lending only, BIS methodology.

Q4 estimate

34


35/101

Central government finances

-4

0

4

8

12

-12

0

12

24

36


Balance %GDP (rhs)Revenue growth (lhs)Expenditure growth (lhs)

%yr%GDP


35


36/101

Growth in the monetary aggregates

0

10

20

30

40

0

10

20

30

40


Deposits

M1

M2

DXRR*

%yr %yr

Sources: CEIC, Westpac.* DXRR: Deposits ex required reserves.

36


37/101

Peoples Bank open market operations

-1600

-1200

-800

-400

0

400

800

1200

1600

-1600

-1200

-800

-400

0

400

800

1200

1600

Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13

RMBbnRMBbn

Reverse repo maturities Repo

Bills issued Bill maturities

Reverse repo Repo maturities

Net injection/withdrawal


Net injection

Netwithdrawal

RRR cuts


38/101

Interbank loan volumes by maturity: weekly

y = 1.3262x + 562.37

0

250

500

750

1000

1250

1500

1750

2000

0

250

500

750

1000

1250

1500

1750

2000

Jan-10 Sep-10 May-11 Feb-12 Oct-12 Jul-13

RMBbnRMBbn

Other maturity

Overnight

Total

Sources: CEIC, Westpac.


39/101

Interbank loan turnover volume by type of FI

0

2000

4000

6000

8000

10000

12000

0

2000

4000

6000

8000

10000

12000

Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13

RMBbnRMBbnOther FIs

Foreign

Private urban banks

State banks

Rural banks & Credit co-ops



40/101


41/101

Percent of loans issued at a discount

0

10

20

30

40

0

10

20

30

40


% of loans executed 10%below benchmark

% %

Source: CEIC, Westpac Economics.

41


42/101

SHIBOR & repo/reverse repo corridor

0

2

4

6

8

10

12

14

0

2

4

6

8

10

12

14

May-12 Sep-12 Jan-13 May-13 Sep-13

%pa%pa

PBOC revealed 7 day rate corridor

Overnight SHIBOR

Sources: WestpacEconomics, CEIC.


43/101

2

3

4

5

6

7

8

910

2

3

4

5

6

7

8

910

Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13

%pa%pa

General loans Bills

1-yr policy rate Housing

Sources: Westpac Economics, CEIC.

The policy benchmark & actual loan rates

43


44/101

The deposit ceiling and WMP returns

1

2

3

4

5

6

1

2

3

4

5

6


%pa%pa

Deposit rate with 10% top up

1 year benchmark saving deposit

Weighted average WMP return

Sources: Westpac, CEIC.


45/101

New lending : shadow sedate in second half

-500

0

500

1000

1500

2000

2500

3000

-500

0

500

1000

1500

2000

2500

3000

Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14

RMBbn RMBbnOther financing* Bank to HouseholdBank medium & long term Bank short termBank - Bill finance Total bank

* Other financing includes trust and entrusted loans, equityand bond raisings, non-bank bills and FX loans.

Sources: Westpac, CEIC.


46/101

Medium & long term loans

0

20

40

60

80

100

120

140

0

250

500

750

1000

1250

Jan 04 Jan 06 Jan 08 Jan 10 Jan 12

MLT % of total RMBbn

New medium and longterm loans (rhs)

MLT share (lhs)

Sources: CEIC, Westpac.MLT share is smoothed.


47/101

Total credit supply new flows

-160-80080160240320

400480560640

Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14-50-25

0255075

100

125150175200

%yr%yr

TSF (lhs)Banks* (lhs)Other finance (rhs)

Sources: CEIC, Westpac.* Local currency loans only.12 month sum of new flows.


48/101

0

25

50

75

100

125

150

175

-50

-25

0

25

50

75

100

125

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

%yr%yr

TSF (lhs)

MLT share of bank loans (rhs)

Sources: Westpac Economics, CEIC.TSF is total social financing.MLT is medium and long terms loans.

Credit supply growth & loan composition


49/101

Property developer finance: growth by type

-50

-25

0

25

50

75

100

125

-50

-25

0

25

50

75

100

125


%yr%yr

"Self raised"

Loans

Down payments and sales revenue

Total

Sources: CEIC,Westpac Economics.

49


50/101

Land purchased and construction starts

-40

-20

0

20

40

60

80

-40

-20

0

20

40

60

80


%yr%yr

Starts (volume)

Land purchased

Sources: CEIC, Westpac Economics. 12mma.

50


51/101

Sales volumes usually lead starts by 6 months

-30

-15

0

15

30

45

60

75

-30

-15

0

15

30

45

60

75


%yr%yr

Sales 6mths prior

Starts

Sources: CEIC, Westpac.Underlying data in sqm.12 month average of raw oya growth rate.

51


52/101

Housing sales, completions & land prices

90

100

110

120

130

140

150

160

75

100

125

150

175

200

225

250

Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13

indexindex

Completions (lhs)

Sales (lhs)

Residential land price (rhs)

Sources: CEIC, Westpac. Aug-2006 = 100.Underlying activity data in sqm.Land price is a spliced series of 105 and 70 city data.

52


53/101

Chinese land prices: total & residential

-10

-5

0

5

10

15

20

25

-10

-5

0

5

10

15

20

25

Mar-05 Sep-06 Mar-08 Sep-09 Mar-11 Sep-12 Mar-14

% 6mthannualised

% 6mthannualised

Total

Residential

Sources: CEIC, Westpac Economics.Land prices are a spliced series for 70cities up to Dec-10 and 105 cities since.

53


54/101

70 city house prices: net balance m/m change

-80

-60

-40

-20

0

20

40

60

80100

-80

-60

-40

-20

0

20

40

60

80100

Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13

Net % of cities Net % of citiesNew

Secondary market


54


55/101

Major city house prices: level

100

105

110

115

120

125

130

100

105

110

115

120

125

130

Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13

Index2010=100

Index2010=100

Beijing ShanghaiGuangzhou ShenzhenChongqing


55


56/101

Daily iron ore prices in China

70

85

100

115

130145

160

175

190

70

85

100

115

130145

160

175

190

Aug-10 Feb-11 Sep-11 Mar-12 Oct-12 Apr-13 Nov-13

USD/tUSD/t

3 mth forward9 mth forwardTSI 62% fines benchmark

Sources: Westpac Economics,Bloomberg, SGX Asiaclear

30% intwo months

36% intwo months

+82% in3 months

30% in

five months

56


57/101

Chinese imports total & key raw materials

050100150200250300350400450500550600650700

050

100150200250300350400450500550600650700


indexindex

Total imports

Crude oil

Iron ore

Sources: CEIC, Westpac Economics. Value of total imports and volume of raw materials.

57


58/101

Various measures of inflation

-10

-5

0

5

10

15

-10

-5

0

5

10

15

Mar-04 Sep-05 Mar-07 Sep-08 Mar-10 Sep-11 Mar-13

%yr%yr

Non-food CPI

Fixed investment price index

Consumer price index

GDP implicit price deflator

Producer price index


58


59/101

Chinese consumer prices

-10

-5

0

5

10

15

20

25

-10

-5

0

5

10

15

20

25


%yr

TotalShelter ClothingFoodHealth


%yr


60/101

Chinese CPI: the shelter component

-20

-15

-10

-5

0

5

10

15

-20

-15

-10

-5

0

5

10

15


%yr

TotalBuilding costsRent

Private housingUtilities


%yr


61/101

Chinese CPI: clothing & related

-4

-2

0

2

4

6

8

1012

-4

-2

0

2

4

6

8

1012


%yr

Total Garment

Footwear Material

Tailoring


%yr


62/101

Chinese producer prices

-30

-20

-10

0

10

20

30

40

-30

-20

-10

0

10

20

30

40


%yr

TotalProducer goodsMiningRaw materialsManufactured


%yr


63/101

Chinese consumer prices

-10

-5

0

5

10

15

20

25

-10

-5

0

5

10

15

20

25


%yr

TotalShelter ClothingFoodHealth


%yr

63


64/101

Chinese CPI: the shelter component

-20

-15

-10

-5

0

5

10

15

-20

-15

-10

-5

0

5

10

15


%yr

TotalBuilding costsRent

Private housingUtilities


%yr

64


65/101

Chinese CPI: clothing & related

-4

-2

0

2

4

6

8

1012

-4

-2

0

2

4

6

8

1012


%yr

Total Garment

Footwear Material

Tailoring


%yr

65


66/101

Chinese producer prices

-30

-20

-10

0

10

20

30

40

-30

-20

-10

0

10

20

30

40


%yr

TotalProducer goodsMiningRaw materialsManufactured


%yr

66


67/101

Decomposing 12 month real CNY appreciation

-12

-8

-4

0

4

8

12

1620

-12

-8

-4

0

4

8

12

1620


pptpptRelative price levelNominal exchange rateReal exchange rateUSD/CNY inverted

Source: BIS, Westpac.


68/101

Chinas exchange rate: broad & bilateral USD

70

80

90

100

110

120

130

140

70

80

90

100

110

120

130

140


indexindex

Real Nominal USD per Yuan

Sources: CEIC, BIS.Indices = 100 in July 2005.


69/101

The exchange rate & inflation

-20-15-10-50510

15202530

-20-15-10

-505

10

15202530

Jan-01 Dec-03 Nov-06 Oct-09 Sep-12

%chg%chg

Annualised CPI inflation (lhs) Annualised CNY appreciation (rhs)

Sources: CEIC, Westpac Economics

69


70/101

Food prices & the CNY exchange rate

-2

0

2

4

6

8

10

-5

0

5

10

15

20

25


%%

Food price inflation %yr (lhs)

USD/CNY %yr (rhs)

Sources: Westpac Economics, CEIC.

forecast

70


71/101

Exporter margins and the exchange rate

-2

0

2

4

6

8

10

-2

0

2

4

6

8

10


%%

Range of profit margins in key export industries

Annual appreciation of CNY

Sources: Westpac Economics, CEIC,


72/101


73/101

Overnight SHIBOR & the 12mth CNY NDF

0

2

4

6

8

10

12

14

0.5

1.0

1.5

2.0

2.5

3.0

Sep-12 Jan-13 May-13 Sep-13 Jan-14

%pa%chg

CNY NDF 12mth (lhs)Overnight SHIBOR (rhs)

Sources: WestpacEconomics, CEIC.


74/101

USD/CNY NDF pricing

6.06.26.4

6.66.87.07.27.4

7.67.88.08.28.4

6.06.26.4

6.66.87.07.27.4

7.67.88.08.28.4

Feb 03 Jan 05 Jan 07 Jan 09 Dec 10 Dec 12

3mth6mth12mth1mth

CNY

Sources: Westpac, CEIC

CNY


75/101

USD/CNY NDF curves

-70-60-50-40-30-20-10

010203040

-70-60-50-40-30-20-10010203040

Feb 03 Jun 04 Oct 05 Mar 07 Jul 08 Dec 09 Apr 11 Sep 12 Jan 14

12mth minus 3mth12mth minus 6mth12mth minus 1mth

bps

Sources: Westpac, CEIC

bps


76/101

USD/CNY NDF curves

-25

-20

-15

-10

-5

0

5

1015

-25

-20

-15

-10

-5

0

5

1015

Jan 10 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13

12mth minus 3mth12mth minus 6mth12mth minus 1mth

bps

Sources: Westpac, Bloomberg

bps


77/101

Growth spillovers between systemic economies

From ChinaFrom Euro area

From USFrom Japan

0.00

0.05

0.10

0.15

0.20

0.25

China

Euro area

US

Japan

per c

ent

Impulse responsefrom positive1ppt outputshocks.Source: IMF

77


78/101

Net IIP in the G20: many debtors, few creditors

-50

-40

-30

-20

-10

0

10

20

30

4050

-50

-40

-30

-20

-10

0

10

20

30

4050

JPY DEUCNYARPRUB INR KRWFRA CADGBPZAR USDBRL ITA IDR MXNTKL AUD

%GDP %GDP

Source: IMF, Westpac.

78


79/101

Various measures of Chinese export leverage

0

10

20

30

40

0

10

20

30

40

2000 2002 2004 2006 2008 2010 2012

%GDP%GDPNet exports %GDP

Export GVA %GDP

Gross exports %GDP


79


80/101

World export shares by country & region

0

3

6

9

12

15

1984 1988 1992 1996 2000 2004 2008

% world total

Sources: WDI, Westpac.Goods & services.

India

UK

Japan

Germany

USA

China

Other Asia

France

80


81/101

Manufacturing exports and resource imports

0

5

10

15

20

25

1980 1985 1990 1995 2000 2005 2010

% world totalJapan - manuf exports Japan - resource importsChina & HK - manuf exports China & HK - resource importsGermany - manuf exports Germany - resource importsUSA - manuf exports USA - resource imports

Sources: WDI, WTO.Resource imports definedas fuel & mining products.

81


82/101

Nominal export shares: major countries

0

10

20

30

40

50

60

AUD FRA DEU JPY KRW SEK TKL GBP USD BRL INR CNY

% GDP

2000

2007

2011

Sources: CEIC, OECD, Westpac, Dragonomics. Ex China,nominal national accounts basis for goods and services. ForChina, goods only, value-added estimates.

82


83/101

Chinas share: selected elements of world activity

0

5

10

15

20

25

H o u s e

h o

l d

c o n s u m p

t i o n

G r o s s

f i x e

d

c a p

i t a l f o r m a

t i o n

E x p o r t s

*

I m p o r t s

*

M a n u

f a c t u r i n g

v a

l u e a

d d e

d

C o n s

t r u c t

i o n

v a

l u e a

d d e

d

S e r v

i c e s v a

l u e

a d d e

d

P P P G D P

N o m

i n a

l U S D

G D P

C O 2 e m

i s s i o n s

` `

E n e r g y u s e

^

%

1980 2000 2010

Sources: UN, IMF, IEA, Westpac Economics. * Goods & services.^ Total primary energy supply `` From fossil fuel combustion.

All national accounts related shares are in 2005 constant US dollars.

83

l b d


84/101

Export unit value by industry

-25-20-15-10

-505

1015202530

-25-20-15-10-505

1015202530


Clothing & footwear Furniture

Elec & telcoOffice machineryTextiles

%yrSources: Westpac, CEIC. 3mma.

%yr

84

Th C T d F i i b ll h


85/101

The Canton Trade Fair: sourcing bellwether

-40

-30

-20

-10

0

10

20

3040

-40

-30

-20

-10

0

10

20

3040

2005 2006 2007 2008 2009 2010 2011 2012 2013

%yr%yr

Spring Autumn

Total both sessions


E i l b i d


86/101

Export unit value by industry

-25-20-15-10

-505

1015202530

-25-20-15-10-505

1015202530


Clothing & footwear Furniture

Elec & telcoOffice machineryTextiles


%yr

E b b d


87/101

Exports by broad sector

-45

-30

-15

0

15

30

45

6075

-45

-30

-15

0

15

30

45

6075


Light and basicMachinery & transport

Other manufacturesChemicals


%yr

I b b d


88/101

Imports by broad sector

-45

-30

-15

0

1530

45

60

7590

-45

-30

-15

0

1530

45

60

7590


Other raw materials Fuel

Chemicals Other manufactures

Machinery & transport Food


%yr

Chi t t d l d k t


89/101

Chinese exports to developed markets

-45

-30

-15

0

15

30

45

6075

-45

-30

-15

0

15

30

45

6075


US Japan Australia New ZealandCanada EU


%yr


90/101


91/101

Imports from emerging markets


92/101

Imports from emerging markets

-60

-30

0

30

60

90

120

150180

-60

-30

0

30

60

90

120

150180


India KoreaTaiwan RussiaBrazil ASEAN

%yr

Sources: Westpac, CEIC. 3mma.

%yr

Chinese trade: uneven outcomes


93/101

Chinese trade: uneven outcomes

-45

-30

-15

0

1530

45

60

7590

-45

-30

-15

0

1530

45

60

7590


Exports to US/EU/JPImports from commodity producers

Imports from NIEs

Exports to NIEs

Imports from US/EU/JP

%yrSources: Westpac,CEIC. 3mma.

%yr

Chinas current account balance


94/101

Chinas current account balance

-3

0

3

6

9

12

-3

0

3

6

9

12


% GDP % GDP

Other CA

Trade

Current account

94

Chinas balance of payments


95/101

China s balance of payments

-20

-15

-10

-5

0

5

10

1520

-20

-15

-10

-5

0

5

10

1520


% GDP % GDPCurrent account Change in reserves

Other Portfolio balance

Direct balance

Inflow

Outflow

Source: CEIC, Westpac Economics.

The state of global imbalances


96/101

The state of global imbalances

-3

-2

-1

0

1

2

3

1994 1998 2002 2006 2010 2014 2018

% WGDPSouth Asia NIEs & ASEAN 5

MENA, Canada and Russia Latam

CEE and CIS ex Russia Germany

Other EU Japan

China USA

Sources: IMF, Westpac.

% WGDP

96

Chinas trade balance decomposed


97/101

China s trade balance decomposed

-10

-5

0

5

10

15

-10

-5

0

5

10

15

1980 1985 1990 1995 2000 2005 2010

% GDP % GDP

Overall trade balancePrimary products balanceTotal manufacturing balancemachinery and transport balance (lhs)

Current USD prices converted to RMB.Sources: CEIC, Westpac Economics.

97

Industrial profits: level & as a share of GDP


98/101

3

4

5

6

78

9

10

1112

5

6

7

8

9

Nov-00 Nov-03 Nov-06 Nov-09 Nov-12

% GDPLn index

Profits - log level

Profits % GDP

Sources: CEIC. Underlying dataseasonally adjusted by Westpac Economics.

Log level is in the quarter. % of GDP is 4qtr sum.

Industrial profits: level & as a share of GDP

98

Income level per capita & its distribution


99/101

Income level per capita & its distribution

20

30

40

50

60

70

0 10 20 30 40 50 60

Sources: WestpacEconomics, WDI

Gini index

PPP GDPper head

China

US

Brazil

South Africa

WealthyOECD

INR & IDR

Russia

Poland

Chile

Mexico

Malaysia

Thai

Colombia

99

China: the key messages reiterated


100/101

China: the key messages reiterated

The recovery exhibited a stop-start nature in the first half of the year. The tone of the data flowshifted for the better in July and August though, with improved outcomes evident essentially acrossthe board. The good news culminated with the release of the Q3 national accounts, which reporteddecent gains in real and nominal growth. However, the month-of-September data showed signsthat the recovery had peaked, with a loss of momentum in both domestic and external demandentering Q4. The October & November da ta rounds c onf i rm ed th is , par t icu lar ly in re lat ion tof ixed inv es tment . As long anticipated, the pipeline is not being replenished with sufficient urgencyto maintain current growth rates in infrastructure; new housing controls are being imposed in tier 1cities; and the lagged impact of less accommodative monetary policy (new credit has been soft in

halve of last 6 months) will soon be felt.

Phat Dragon updates his basic views as follows:

a) The low ceiling recovery-expansion plateaued in Aug-Sep.b) Year-ended growth rates will begin to decelerate in earnest as a modest loss of momentum(deduced from the now less lean inventory position in heavy industry, plus a diminished tailwindfrom the hefty early year credit supply) combines with less flattering base effects.c) Now that the Plenum is past and the NAO report on local government debt has been released,cyclical policies will tilt more decisively towards tightening.

100

Disclaimer


101/101

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Phat Dragon the Chart Pack January 2014

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