From “How Will the Olympics Affect Growth Numbers?” by Wang Tao, UBS chief China economist, August 15:
Developers still had some liquidity cushion from previous profits and locked-in sales, or from fund raising in the capital markets or other channels outside of the banking system … however, that cushion may be thinning … July real estate investment growth [dropped] sharply to 13% year-on-year. As land sales and new construction areas started to slow, and as liquidity gets really tight in the coming months, we would expect real estate investments [is] to show a significant slowdown … The size of Olympics-related investments are relatively small compared to the overall size of the economy and to overall investments … we do not believe that China’s growth will significantly alter course because of the Olympics. We do think that following the peak construction activities in the last few quarters, the slowdown in a few cities may be reflected in the national data for a few months.
From “What Can China Gain From the Olympics?” by Sherman Chan, Moody’s Economy.com economist, August 12:
Playing host to the Olympics will neither boost nor curb China’s growth this year. There will be a surge in retail trade during the third quarter, but much of this positive contribution to growth could be offset by the loss incurred in the industrial sector, as factories around Beijing were forcibly shut down in an attempt to control pollution … There are also doubts as to whether China has maximized its gains from tourism, because the authorities imposed visa restrictions earlier this year … Nevertheless, the country should benefit in the long run. Its global profile has been raised … [and] the enormous spending on infrastructure, estimated to be over 60% of the total Olympics bill, will improve the country’s long-term competitiveness.
From “China: July retail sales growth accelerated to 23.3% year-on-year” by Wang Qian, JPMorgan economist, August 13:
The wealth effect is probably less significant in China than in other economies given the small relative size of the equity market … Other than autos, a range of consumer discretionary and durable goods have registered accelerating growth recently: sales growth of jewelry (up 43.6% year-on-year in July) and cosmetics (up 31.8%) have resumed their solid upward trend … Growth in communication appliance and household electronics sales also accelerated in July … Sales of selected consumer stable goods picked up, likely reflecting the strengthening consumption of lower income/wealth groups … More broad-based strength in these categories suggests that [rising] domestic consumption has continued to be bolstered by solid income growth and the government’s strategic policy support.