IFF Newsletter | Bond Sales Of China’s Local Gov’ts Surge in Aug

TIME：2024-09-05

From the Editor

Chinese local governments have accelerated the pace of borrowing money to expand effective government investment and stabilize growth.According to public data, local governments issued RMB 1.2 trillion of bonds last month, versus RMB 718 billion in July.

The Purchasing Managers' Index for the US manufacturing industry in August recorded 47.2%, up 0.4 points from the previous month but lower than the expected 47.5%, and for the fifth consecutive month below 50%, which indicates the manufacturing sector is generally contracting, according to the data released by the Institute for Supply Management (ISM) on Tuesday.

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China News

China’s Local Gov’ts Crank Up Bond Sales in August to Fuel Economic Growth

Chinese local governments are stepping up the pace of bond issuance. Sales were about 67 percent higher toRMB1.2 trillion in August compared with the previous month, with the quicker pace intended to boost economic growth through higher investment, according to public data.

In the first eight months of the year, local government bond sales fell 14 percent toRMB5.4 trillion from the same period of last year, of which RMB2.3 trillion were refinancing bonds and RMB3.1 trillion were new.

Shanghai to Offer Record USD562 Million Subsidies for Trade-In of Consumer Goods

Shanghai will grant a recordRMB4 billion (USD562 million) in subsidies to support the trade-in of consumer goods, such as cars and home appliances.

Eighty-five percent of the subsidies will be funded by ultra-long special treasury bonds issued by the central government, while the remaining 15 percent will be provided by supplementary funds from Shanghai’s finance department, according to a document issued by the Shanghai Municipal Development and Reform Commission and the Shanghai Municipal Finance Bureau on Tuesday.

China announces probes over Canada's tariff hike, certain products

China will launch an anti-discrimination investigation into Canada's tariff hike on electric vehicles as well as steel and aluminium products imported from China, the Ministry of Commerce said Tuesday.

China will also launch anti-dumping investigations into rapeseed imports and related chemical products from Canada, the ministry said.

China's int'l trade in goods, services up 12 pct in July

The value of China's international trade in goods and services reached approximatelyRMB4.24 trillion in July 2024, marking an increase of 12 percent year on year, the State Administration of Foreign Exchange said on Friday.

In U.S. dollar terms, the country's exports and imports of goods and services amounted toUSD317.5 billion and USD276.4 billion, respectively, recording a surplus of USD41.1 billion, the SAFE added.

China Rolls Out New Measures to Spur Private Investment as Growth Stalls

The Chinese government will develop a working mechanism to promote private investment funds and factor guarantees to enhance policies that promote private investment and increase support for private investment projects, after private investment stops growing in the first seven months.

The National Administration of Financial Regulation and the National Development and Reform Commission will study policies to promote the development of private investment and guide financial institutions such as banks and insurance companies to innovate financial products and services, according to the notice released by the two government departments together with the Ministry of Natural Resources and the Ministry of Ecology and Environment on Friday.

China’s Factory Activity Falls to Lowest in August Since February, NBS Data Shows

The China's manufacturing purchasing managers’ index (PMI) stood at 49.1 percent in August, down 0.3 points from July, with a fourth month below the 50 percent, indicates contraction, according to data the National Bureau of Statistics released on Saturday.

The non-manufacturing PMI rose to 50.3 in August from 50.2 the month before, indicating a slight improvement in business sentiment, NBS data also showed.

The composite PMI output index, the weighted sum of the manufacturing production sub-index and the non-manufacturing PMI,nosed to 50.1 from 50.2 the previous month, showing that production and activities continue to experience a modest expansion overall.

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International News

The US Manufacturing PMI Contracted For The Fifth Consecutive Month in August, Missing Expectation

The Purchasing Managers' Index (PMI) for the US manufacturing industry stood at 47.2 percent in Auguest, marking the fifth consecutive contraction, the Institute for Supply Management (ISM) said on Tuesday.

The PMI registered below 50% 21 times in the past 22 months. A reading below 50 indicates contraction. Although the data was higher than 46.8% in July, it fell short of economists' expectations of 47.5%, mainly due to a slowdown in factory orders and production.

Australia’s Economy Grew at Its Slowest Pace in Over 30 Years Excluding The COVID-19 pandemic period as Consumers Cut Spending

Australia's GDP grew by 1.5 percent in the 2023-24 financial year ending on June 30, 2024, the lowest growth rate excluding the COVID-19 pandemic period since 1991-1992, as consumers hunkered down in the face of elevated borrowing costs and stubbornly sticky inflation, official figures released by the Australian Bureau of Statistics (ABS) on Wednesday showed.

The economy increased by 0.2 percent, quarterly, form April to June - matching the growth in the final three months of 2023 and the first three months of 2024.

Japan Firms' April-June Pretax Profits Hit Record, Investment up 7.4%

Pretax profits at Japanese companies hit a record-high JPY 35.77 trillion (USD 244 billion) in April-June and their capital spending rose 7.4 percent from a year earlier, the data from the Finance Ministry showed Monday, reflecting improving corporate activity amid an economic recovery.

Pretax profits grew 13.2 percent, rising for the sixth straight quarter, lifted by brisk overseas sales, a weak yen, as investment by all non-financial sectors for purposes such as building factories and adding equipment came to JPY 11.92 trillion, marking the 13th consecutive quarterly increase.

Eurozone Inflation Falls to Three-year Low in August

The Eurozone's annual inflation rate fell to 2.2 percent in August, down from 2.6 percent in July, marking its lowest point since July 2021, according to a flash estimate published by Eurostat on Friday.

The main driver of inflation remains the price of services, which saw a year-on-year growth of 4.2 percent in August, up from 4 percent in July, according to the European Union's statistical office.

Among the major economies, Germany's inflation rate stood at 2 percent in August, down from 2.6 percent the previous month; France's consumer price index (CPI) was at 2.2 percent, down from 2.7 percent; and Spain's CPI at 2.4 percent, down from 2.9 percent in July.

U.S. GDP Growth in Q2 Revised up to Annual Rate of 3 Percent

U.S. gross domestic product (GDP) growth rate rose at an annual rate of 3.0 percent in the second quarter of this year, the Department of Commerce reported in its second estimate released on Thursday.

In the advance estimate released in late July, the increase in real GDP was 2.8 percent. The update primarily reflected an upward revision to consumer spending, according to the department's Bureau of Economic Analysis.

UK House Prices Rise at Fastest Pace Since Late 2022

The UK recorded the fastest annual house price growth in August since late 2022, according to the Nationwide Building Society, as cheaper mortgages continued to power a gradual recovery in the property market.

The mortgage lender’s house price index rose 2.4 per cent year on year in August, but compared with July, prices edged down 0.2 per cent and came in lower than the 0.2 per cent monthly increase forecast by economists.