Beauty, Zhuangzi

毛嬙、麗姬，人之所美也，魚見之深入，鳥見之高飛，麋鹿見之決驟。

- 莊子, 齊物論

Mao Qiang(毛嬙) and Li Ji(麗嬉) were accounted by men to be most beautiful, but when fishes saw them, they dived deep in the water from them; when birds, they flew from them aloft; and when deer saw them, they separated and fled away.

- Zhuangzi (莊子), The Adjustment of Controversies (齊物論)

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http://ctext.org/zhuangzi/adjustment-of-controversies

First Insights: China: HSBC flash PMI drops surprisingly

Economics Research | Asia Ex-Japan
25 February 2013

First Insights: China: HSBC flash PMI drops surprisingly

The HSBC flash PMI dropped surprisingly to 50.4 in February from 52.3 in January (Consensus: 52.2; Nomura: 53.3). The new orders subcomponent fell to 50.9 from 53.1 in January and new export orders to 49.8 from 53.7. The output subcomponent fell to 50.9 from 53.1, while that for the stock of finished goods rose slightly to 49.8 from 49.6.

First Insights: China: Fuel price hikes add to inflationary pressures

Economics Research | Asia Ex-Japan | Nomura
25 February 2013

First Insights: China: Fuel price hikes add to inflationary pressures

China last night announced a hike in gasoline and diesel retail prices, effective today. Increases of 3.5% and 3.8% have been applied, respectively, adding RMB300 and RMB290 to the prices per ton. This is the second major price hike announced in five days – on 20 February we saw the largest hike in the rail freight tariff rate since 2003, which was unusual in terms of timing as tariff hikes in Q1 are not common.

Egotism·Humility, Zhuangzi

同於己為是之，異於己為非之。

- 莊子 寓言

Those which agree with their own they hold to be right, and those which do not so agree they hold to be wrong.

- Zhuangzi (莊子), Metaphorical Language(寓言)

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http://ctext.org/zhuangzi/metaphorical-language

Eco Analysis - China's stubborn housing inflation risks further policy tightening (W. Yao)

Eco Analysis - China's stubborn housing inflation risks further policy tightening (W. Yao)

China January housing inflation accelerated to the fastest pace since early 2011. This report justifies Beijing's renewed hawkishness on the housing market. Further acceleration of housing inflation will most likely trigger more policy tightening. Meanwhile, RBA Governor Stevens sounded rather upbeat on the economy in testimony to Parliament, and rather disinclined to cut rates in the short term. Key points were that there is a good deal of stimulus in the pipeline from previous easing, and that the high A$ has been a key factor in the current low rate setting. In response, the A$ strengthened nearly 1c and short-term rates rose.

Asia Chart Alert: China: Property prices rose faster in January

Economics Research | Asia Ex-Japan
22 February 2013

Asia Chart Alert: China: Property prices rose faster in January

This should further pressure the government to tighten monetary and property market policies.

Fig. 1: Property price growth and M2 growth

Asia Insights: Reasons not to be too bullish on China

Fixed Income | Asia Ex-Japan
21 February 2013

Asia Insights: Reasons not to be too bullish on China

· We reiterate our view that the consensus forecast for China’s economic growth is too optimistic. We expect GDP growth to slow in H2 to 7.3% y-o-y while the consensus expects it to be 8.1%.

· We list five recent developments that support our cautious view, including local governments lowering their 2013 GDP growth targets by 0.5 percentage points (pp), and the severe air pollution problems that could spur Beijing to rethink its growth model.

· The strength of coincident macro data may continue in Q1, but we believe leading policy indicators such as total social financing and M2 growth will soon moderate from currently high levels.

Asia Chart Alert: China: The largest hike in the rail freight tariff since 2003

20 February 2013

Asia Chart Alert: China: The largest hike in the rail freight tariff since 2003

It reinforces our view that CPI inflation will rise above 3.5% in H2 and lead to two interest rate hikes.

Fig. 1: Rail freight tariff and its growth

Forgiveness, Confucius

Forget injuries, never forget kindnesses.

- Confucius (孔子, 551BC–479BC)

Advice, Chinese Proverb

Do not use a hatchet to remove a fly from your friend’s forehead.

- Chinese Proverb

War, Sun-Tzu

知彼知己百戰不殆。

- 孫子

If you know the enemy and know yourself, you need not fear the result of a hundred battles.

- Sun-Tzu (孫子)

Awakening, Buddha

There is only one time when it is essential to awaken. That time is now.

- Gautama Buddha

Work, Confucius (孔子)

Choose a job you love, and you will never have to work a day in your life.

- Confucius (551BC–479BC)

First Insights: China: Government announces reform plan to improve income distribution

First Insights: China: Government announces reform plan to improve income distribution

The Chinese government announced its plan to reform income distribution today. This is an important reform plan which has been debated by the government for many years. Our comments:

First Insights: China: First annual capital account deficit since 1998

First Insights: China: First annual capital account deficit since 1998

China’s capital account recorded a deficit of US$117bn in 2012, the first capital account deficit since 1998. Net FDI inflows rose slightly to US$180bn in 2012 from US$179bn in 2011, but were offset by net portfolio and other financial outflows.

Forgiveness, Confucius

在开始你的复仇之旅前，先挖两个坟墓。

- 孔子

Before you embark on a journey of revenge, dig two graves.

- Confucius (孔子)

First Insights: China: Surprise fall in official PMI

Economics Research | Asia Ex-Japan
01 February 2013

First Insights: China: Surprise fall in official PMI

China’s official PMI dropped surprisingly to 50.4 in January from 50.6 in December (Consensus 51.0, Nomura 50.9), which casts some doubt on the strength and sustainability of the growth recovery.
Sub-indexes show mixed signals. Output was down to 51.3 from 52.0, but new orders rose to 51.6 from 51.2 and while inventories of finished goods fell to 47.4 from 49.4, which suggests that the PMI may improve next month.

The improvement of new orders was mostly driven by domestic demand as export orders fell. Input prices rose sharply to 57.2 from 53.3, reinforcing our view that inflation may surprise on the upside in 2013.

Economists
Zhiwei Zhang