Morgan Stanley Fixed-China Economics Macro Webcast Action Needed to Break Debt-Deflation loop.-此为英文文档

Update

August13,202308:19PMGMT

ChinaEconomics|AsiaPacific

MacroWebcast:ActionNeededtoBreakDebt-DeflationLoop

Relatedreports:

China's3DJourney:HowChinacouldavoida1990sJapansituation

ChinaTrendspotting:StrongSummerTravel,FiscalSteppingUpSlightly

MorganStanleyAsiaLimited

RobinXing

ChiefChinaEconomist

+8522848-6511

Robin.Xing@

Forimportantdisclosures,refertotheDisclosureSection,locatedattheendofthisreport.

Update

2

PolicyTimelinePost-PolitburoMeeting

Source:MorganStanleyResearch1

MorganStanleyResearch3

NewCNYloanstotherealeconomyfallingtoa17-yearlow

8

7

6

5

4

3

2

1

0

-1

-2

-3

JulyDataPointtoRisingDebt/DeflationRisk

JulyCPIslippedintodeflationforthefirsttimeinovertwoyears

HeadlineCPI

CoreCPI

FoodCPI

YoY%

Jun-21Sep-21Dec-21Mar-22Jun-22Sep-22Dec-22Mar-23Jun-23

2

Source:NBS,CEIC,PBoC,MorganStanleyResearch

4

Feb-19

Apr-19

Jun-19

Aug-19

Oct-19

Dec-19

Feb-20

Apr-20

Jun-20

Aug-20

Oct-20

Dec-20

Feb-21

Apr-21

Jun-21

Aug-21

Oct-21

Dec-21

Feb-22

Apr-22

Jun-22

Aug-22

Oct-22

Dec-22

Feb-23

Apr-23

Jun-23

Aug-23

Update

PropertySalesFurtherDeteriorateinJuly/August

Primarysalesin50citiestumbledtolowsinApril/May2022

WeeklyPrimarySalesin50Cities(Units)

Level4-weekmovingaverage-50Cities

90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

WeakYoYgrowthdespiteamorefavorablebase

WeeklyPrimarySalesin50Cities(Units)

120%

100%

80%

60%

40%

20%

0%

-20%

-40%

-60%

-80%

Nov-20

Dec-20

Jan-21

Feb-21

Mar-21

Apr-21

May-21

Jun-21

Jul-21

Aug-21

Sep-21

Oct-21

Nov-21

Dec-21

Jan-22

Feb-22

Mar-22

Apr-22

May-22

Jun-22

Jul-22

Aug-22

Sep-22

Oct-22

Nov-22

Dec-22

Jan-23

Feb-23

Mar-23

Apr-23

May-23

Jun-23

Jul-23

Level4-weekmovingaverage-50cities

3

Source:CREIS,MorganStanleyResearch

Update

MorganStanleyResearch5

Thevirtuouscycleofproperty-ledgrowthisreversing

PropertyMarket:ANewNormal?

POEsnowonlyaccountforaround1/3oftotalsales

Source:CRIC,MorganStanleyResearch4

6

Potentialwaystodealwithlocaldebt

ResolutionofLocalGovernmentDebtRisk

Overallgovernmentbalancesheetlookshealthy

GovernmentAssetsandDebtvs.GDP

(2019,RMBtrn)

250

200.8

200

150

98.6

100

78-98

50

0

Assets

Liabilities

NominalGDP

Nearterm:Muddlethrough

•Askprovincial-levelgovernmentstocoordinate

Morecomprehensivereformswhichcouldbediscussedthis

fall

•SOEreforms,withhigherdividendpayoutratiosand/or

transferringassetstoLGFVs

•Fine-tuningofcentral-localfiscalrelationships

•Large-scaledebtswapsorrestructuring–lesslikelyatthispoint

5

Source:ChineseAcademyofSocialSciences,MorganStanleyResearch

MorganStanleyResearch7

Update

SubduedConstruction,AcceleratingLGSBIssuance

BothrebardemandandcementshipmentsweakenedfurtherinearlyAugust

10kt

500

450

400

350

300

250

200

150

100

50

0

WeeklyRebarDemand

Dec

Nov

Oct

SepAug

Jul

Jun

MayApr

Mar

Feb

Jan

201820192020202120222023

mt

80

WeeklyCementShipmentsinChina

70

60

50

40

30

20

10

0

JanFebMarAprMayJunJulAugSepOctNovDec

2017201820192020202120222023

Source:Mysteel,DigitalCement,MoF,Wind,MorganStanleyResearch

UseupLGSBannualquotabySep

IssuanceofLocalGovt.SpecialBond,%ofAnnualQuota

110%

90%

67%

70%

50%

30%

10%

JanFebMarAprMayJunJulAugSepOctNovDec

-10%

2017201820192020202120222023

Augustissuancehasreached246bnMTD,amuchfasterpacethanJan-Jul(fullmonthaveragearound360bn)

6

Update

8

Jan-20

Mar-20

May-20

Jul-20

Sep-20

Nov-20

Jan-21

Mar-21

May-21

Jul-21

Sep-21

Nov-21

Jan-22

Mar-22

May-22

Jul-22

Sep-22

Nov-22

Jan-23

Mar-23

May-23

Jul-23

59.9%59.3%

56.9%

53.7%

25.2%

6.8%

TouristarrivalstoHongKongfrommainlandonsteadyrise

SummerTravelUnfazedbyHotWeather

Domesticoperatedflightspostedamultiyearhigh

140

120

100

80

60

40

20

0

WeeklyOperatedFlights,Indexed

(Lastweekof2018=100)

WeekendedonAug6

HongKongTourismArrivalsfromChina,as%of2018Levels

76.2%

67.6%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Jan-23Feb-23Mar-23Apr-23May-23Jun-23Jul-23Aug-23

MTD

7

Source:Variflight,CEIC,MorganStanleyResearch

MorganStanleyResearch9

Update

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