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Eye on the Market | March 15, 2012
J.P.Morgan

Topics: Is US data as good as it looks? Is Chinese data as bad as it looks? Is European data as bizarre as it looks?
adequacy rules; created a program through which municipalities can issue bonds with government guarantees (rather than having to borrow from banks); eased first time homebuyer restrictions; and injected capital into its biggest banks. What the China debate is really about is whether these measures will reinvigorate growth or not. Since much of the recent slowdown was self-imposed due to inflation concerns, it seems reasonable to us to expect the Chinese economy to respond positively to stimulus should it be reapplied. We are not big buyers of Chinese onshore equities for reasons we have explained before, but we do rely on 7%-8% Chinese GDP growth to fuel economic activity in Asia that underpins many of our investments there. As things stand now, we see no reason why this growth target will not be achieved.

Chinese economic monitor, percent change*, YoY, sa, 2006 to present
[Chart 1: Total loans, Money supply]
Total loans
Money supply

[Chart 2: CPI, Non-food CPI]
CPI
Non-food CPI

[Chart 3: Exports]
Exports

[Chart 4: PMI]
PMI

[Chart 5: Retail sales]
Retail sales

[Chart 6: Passenger car sales]
Passenger car sales

[Chart 7: Fixed asset investment]
Fixed asset investment

[Chart 8: Housing price to income]
Housing price to income
Shenzhen
Beijing
Shanghai

[Chart 9: IP]
IP

[Chart 10: Electricity production]
Electricity production

[Chart 11: Cement production]
Cement production

[Chart 12: Steel production]
Steel production

Source: National Bureau of Statistics, PBOC, China Automotive Information, China Economic Information Network, CLSA-Markit, Haver Analytics. J.P. Morgan Securities LLC, ISI Group, J.P. Morgan Private Bank. * PMI data are index level. Housing price to income, cement production and steel production are as of Dec. 2011. All the other data are as of Feb. 2012.

Michael Cembalest
Chief Investment Officer

“What a diff’rence a day makes”, Dinah Washington, 1959, Mercury Records
“Banks Deleveraging and Real Estate”, Morgan Stanley Research, Francesca Tondi, March 15, 2012

The ECRI (Economic Cycle Research Institute) claims papal infallibility on its historical recession predictions. ECB = European Central Bank. EMU = European Economic and Monetary Union

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