China: Economy appears to be stabilizing - BBH

The Chinese economy appears to be stabilizing but at the cost of another large rise in aggregate financing suggests analysts at BBH. 

Key Quotes

“Aggregate financing rose CNY1.74 trillion, almost twice the CNY896 bln in October, and the largest since March.  The breakdown suggests that around 2/3 can be accounted for by new mortgage lending.  With the economy seemingly on stronger footing, officials may do more next year to rein in some of the excesses.”

“China also reported that its foreign exchange deposits rose 11.4% in the year through November.  In October the increase was 4.8%.  Like the recent reserve data, it provides further evidence of capital outflows.  Separately, we note that the tax incentive to buy small autos in China is to expire at the end of the month.  Many hoped it would simply be renewed as it has proven helpful to boost auto sales.  However, official reports suggest it will be raised to 7.5% from 5%.  Initially, it had been set at 10%.”