From "Sinology Chart of the Day: No credit tightening" by Andy Rothman, CLSA China macro strategist, October 15:
The first market to recover, China is also the first to implement its "exit strategy." But this isn’t "tightening"… Instead, Beijing is gradually reducing the volume of its stimulus in response to recovering private investment (real estate and corporate capex) and household consumption. As a result, credit flows have slowed from the supercharged levels of 1H09, but credit remains readily available. The biggest change has been the shuttering of the discounted bills window. Short-term discounted bills accounted for one-quarter of new lending in 1H09, as a way to quickly boost overall loan growth and to help out firms struggling with cash flow. During the three-month period July-September, the net negative value of discounted bills was equal to 48% of the value of discounted bills in 1H09. The net negative monthly balance for discounted bills gives the impression that monthly credit flows have been cut sharply, but this is not the case. In our view, lending remains highly stimulative and there is plenty of room for more cuts in lending without those cuts having a tightening impact. In September, excluding the impact of repaid bills, total lending was RMB868.3 billion [US$127.19 billion]. If private investment and consumption continue to strengthen, and if (as we expect) GDP growth reaches 9%-plus y/y in 3Q09… and 4Q09, we expect Beijing to continue to slow the credit stimulus over the coming quarters. But we also expect enough credit for the economy to expand at about an 8% pace in 2010.
From "China’s Exports Contract by 15.2% in September" by Jing Ulrich, J.P. Morgan chairman of China Equities, October 14:
Demand for China’s exports should rise with the expected recovery in global growth. In recent months, the sequential improvement in export volumes has outpaced improvements in export value – suggesting considerable pressure on export prices. Although exports to OECD countries have shown signs of improvement, anecdotal accounts suggest that buyers have been highly price-sensitive and have negotiated aggressively. Although China’s exports have dropped sharply this year, the country’s share of global exports has shown no sign of softening. The forward-looking "new export order" components of China’s manufacturing PMI series indicate recovery in export demand. The official NBS-PMI registered new export orders of 53.3 in September, the fifth consecutive month of expansion, while HSBC-PMI export orders registered 54.4 in September, the fourth consecutive month of expansion. Growth trends in China’s ports point to a nascent recovery in trade. Container throughput at Guangzhou port increased by 25.5% y/y in August. Although container throughput for eight major Chinese ports remains negative on a y/y basis in August throughput rose 3.6% m/m, following a 5.7% rise in July. In September, channel checks by J.P. Morgan research analysts suggest that throughput in Shanghai (China’s largest container port) increased 5% m/m, with the pace of decline moderating to -4% y/y for the month versus -15% ytd.