The top news of the week was Mr. Xi’s meeting with a slew of American businessmen, including Apple’s Tim Cook. From the reports, it appears the conversation was largely a reiteration of the basic talking points—reforms are continuing, the island is a red line, nuclear weapons should never be used, investors are welcome. But while there were no obvious new elements, the simple fact that he met with these capitalists from America was optically significant. Considered in light of various other changes and announcements, such as relaxation of tourist visas, it may add up to something. It is not clear exactly what, however, and it also could be just superficial atmospherics. It is for investors both domestic and foreign to decide. But for anyone with a stake in this trying to figure out what is happening and how the leadership is planning to address the clearly serious state of the economy with lying flat apparently increasingly being the norm, it is worth pondering.
Meanwhile the property market continues to be deeply depressed and depressing. Shimao is having trouble restructuring its massive external debts and Vanke this week announced “net income attributable to shareholders” down 46%. This compared to an estimate from analysts ahead of the announcement of a fall of 14%. Everbright Bank also missed its expected profit due to the dire state of property. Vox pop conversations also reflect a deep and continuing pessimism. “Maybe things will improve next year?” is a common theme. But it would appear the plan currently is to muddle through. And a number of the structural changes many consider essential are clearly too difficult to seriously consider.
Meanwhile the sun is shining and summer is coming, so that’s good at least.
Have a relaxing weekend.