China Economic Activity and Policy Tracker_ November 29

Summary of the China Economic Activity and Policy Tracker Industry Overview - The report focuses on the economic activity in China, particularly in the real estate, steel, and energy sectors, as well as macroeconomic indicators and policy measures. Key Points Consumption and Mobility - Property Transactions: The daily property transaction volume in the primary market across 30 cities was significantly above last year's level, with a year-over-year increase of 30.3% as of November 28, 2024 [7] - Secondary Market Activity: The daily property transaction volume in the secondary market also showed significant improvement compared to the previous year [8] - Passenger Flights: Domestic passenger flights remained stable over the past two weeks, indicating consistent mobility [8] - Traffic Congestion: The traffic congestion index in major cities was slightly below last year's level, with a decrease of 0.6% year-over-year [12] - Subway Usage: Daily subway passenger volume in 19 major cities was above both year-ago and pre-COVID levels, with a year-over-year increase of 2.3% [13] Production and Investment - Flat Steel Demand: Demand for flat steel increased slightly, with a year-over-year decrease of 0.4% as of November 28, 2024 [18] - Long Steel Demand: Long steel demand decreased significantly, showing an 11.7% year-over-year decline [20] - Steel Production: Steel production decreased by 6.5% year-over-year, indicating a slight reduction in output [25] - Coal Consumption: Daily coal consumption in eight coastal provinces was below last year's level, reflecting a decrease in energy demand [28] - Local Government Bonds: RMB 4.0 trillion in local government special bonds have been issued, exceeding the full-year quota, indicating increased fiscal activity [32] Other Macro Activity - Freight Volume: Freight volume of departing ships at eight major ports was below the 2023 level, with an 8.6% decrease [39] - Oil Demand: China's oil demand edged down to 16.6 million barrels per day (mb/d) in the latest reading, with expectations for higher demand from scheduled domestic flights in December [42][43] - Repo Rates: Interbank repo rates increased over the past week, indicating tightening liquidity conditions [48] Markets and Policy - Credit Spreads: Property high-yield credit spreads widened slightly over the past two weeks, reflecting increased risk perception in the property sector [54] - Currency Movements: The Chinese Yuan (CNY) depreciated against the USD but appreciated against the CFETS basket recently, indicating mixed currency pressures [55] - Policy Announcements: Several macro policy announcements were made to strengthen the economy, including measures to support the property sector and promote foreign trade growth [59] Additional Insights - The report highlights the ongoing recovery in the property market, despite challenges in the steel and energy sectors. The increase in property transactions and subway usage suggests a rebound in consumer confidence and mobility. However, the decline in steel demand and production raises concerns about industrial activity and economic growth sustainability. The widening credit spreads in the property sector indicate heightened risk, which could impact future investment decisions. This comprehensive analysis provides a snapshot of the current economic landscape in China, reflecting both opportunities and challenges for investors and policymakers alike.