From "What Is Driving China’s Growth Recovery?" by Wang Tao, UBS senior China economist, June 12:
With monthly new bank lending now tapering off, does that mean fixed-asset investment will fall off and the recovery will not last? We do not think so, at least not so soon. First, the front-loading of bank lending does not mean that all the funds get spent right away… Second, the initial investment spending by the large state-owned enterprises will gradually spill over into other sectors… Although new bank lending in May reached RMB660 billion… we do not think it will trigger any policy tightening, especially when GDP growth is still below the government’s target and inflation is not yet a concern… A bigger risk may be the difficulty in taming investment and lending in the future than a premature tightening at present.
From "ChinA: How robust is the recovery" by Jing Ulrich, J.P. Morgan chairman of China Equities, June 5:
From January to April, Chinese imports [of iron ore] totaled 188.6 million tons – up 22.8% [y/y]. Iron ore inventories at Chinese ports reached 70.6 million tons on May 22, while a further 20 million tons in stockpiles exist at Chinese steel mills. The China Iron and Steel Association has attributed the soaring imports to speculators and smaller steel mills… [which] have been expanding production and increasing their reliance on higher-grade imported iron ore in a climate of lower spot prices, lower freight rates and declining domestic supplies… The [import] surge must also be seen in the context of the mass closure of domestic mines… Although imports are likely to moderate from the elevated pace in the first quarter, improving domestic fundamentals… suggest that end demand may start to catch up.
From "May retail sales up, led by auto and home electronics" by Lu Ting and TJ Bond, Merrill Lynch economists, June 12:
Official retail sales growth in May came in at 15.2% y/y, up from 14.8% in April… We expect retail sales to remain robust in coming months… Three factors could boost retail sales growth in May: (1) Some wealth effect from rising prices of stocks and properties… (2) Regained confidence over China’s growth prospects as a result of aggressive government policies. (3) Because of the different timing of Dragon Boat Festival, year-on-year growth in retail sales could be distorted to the upside. There is also a low comparison base due to the earthquake last year… [Unit] auto sales also quickened to 34% y/y in May from 25.0% in April. Passenger car sales growth surged to 46.8% y/y in May from 37.4% in April. In value terms, auto sales growth rose to 23.8% y/y in May.