Measuring the progress of China on a weekly horizon needs to be handled with balance, but there is no doubt that negative elements dominated during this period. Economic indicators were with only a couple of exceptions down, sometimes down to decade-lows, and the US-China trade negotiations went through more vicious curves. The general sense is that there is a deal that will be signed in December, but the Iron Buddha tea leaves are providing little guidance and what the agreement will be still seems remarkably up in the air.
Then there is Hong Kong, rising pork prices and indications that debt levels are rising too. But what particularly caught our attention was reports of runs on two small local banks, because the state of the financial system at the local level is something on which there is virtually no transparency and which contains the potential for significant and sudden disruption. They involved a small bank in Liaoning and another in Luoyang, Henan province. In both cases, the runs were attributed to false online rumors and there is no chance of bankruptcy – Beijing is of course going to bail them out. But as an indicator of trends, it is worthy to note.
As are two more positive pieces of information, both related to Alibaba: the company announced plans to do a big listing in Hong Kong, and its singles day sales on Nov 11 generated a huge new record of US$23 billion in sales in nine hours. Against which must be placed the fact that sales to an extent cannibalize other retail channels and time periods, and the margins on sales on the day are notoriously small.
In extra news, with pork getting expensive and harder to find, China announced it will import chicken meat from the US for the first time in five years. Chicken nuggets anyone?