FT: Corporate Bond Issues and Services PMI Suggest Healthy Chinese Economy
Good analysis by James Kynge, editor of FT’s China Confidential, on two developments that are often neglected by Western economists as indicators of the health of the Chinese economy – mid-term corporate bond issues indicating corporate resiliency and the rise of the services Purchasing Managers’ index (PMI) as compared to lagging manufacturing PMI. Mr Kynge declares that there is little chance of a hard landing of the Chinese economy this year going forward. An inflection point has been reached and the new face of the Chinese economy is starting to appear.
Medium term corporate bond issues exceeded medium and long term bank loans by 31% to reach 200 billion RMB in September indicating a shift toward capital markets for financing. Moreover, services PMI reached 52%, well above manufacturing PMI of 47.5%. (Any number over 50.0 indicates an improvement while anything below 50.0 suggests a decline.) This suggests that the services sector is growing rapidly in China, overtaking manufacturing as the biggest employer by a increasingly wide margin. He suggests the National Bureau of Statistics may revise GDP figures to correct the traditional under-reporting of services.
http://video.ft.com/v/1911614365001/China-s-economic-health-remains-strong