China Economic Comment_China Weekly_ Robust Dec momentum, mixed Nov growth, lower CGB yields

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the Chinese economy, particularly the real estate and automotive sectors, as well as government bond yields and monetary policy expectations. Core Insights and Arguments 1. Property Sales Growth: - In December, property sales growth in 30 cities moderated to 15% YoY in the first 21 days, down from 20% YoY in November. Tier-1 cities showed stronger growth compared to lower-tier cities [2][13][27]. - The growth rate further decelerated to 5% YoY in the third week of December, influenced by a high base from the previous year [2][13]. 2. Automotive Sector Performance: - Auto retail sales surged to 34% YoY and wholesales increased by 39% YoY in the first 15 days of December, driven by consumption trade-in subsidies [2][7]. 3. Crude Steel Production: - Crude steel production improved to 3.4% YoY in the first 10 days of December, compared to 2.2% YoY in November [2][31]. 4. Government Bond Issuance: - Weekly net issuance of Central Government Bonds (CGB) dropped to RMB -84 billion during the week of December 16-22, while gross issuance of new special Local Government Bonds (LGB) remained low at RMB 6 billion [2][5]. - Notably, gross issuance of special refinancing LGB surged to RMB 983 billion in the first 19 days of December, following a strong issuance of RMB 1.2 trillion in November [2]. 5. Monetary Policy Outlook: - The 10-year CGB yield decreased by 32 basis points month-to-date in December to 1.7%, reflecting market expectations for further monetary policy easing [24]. - The People's Bank of China (PBC) is expected to cut the policy rate by 30-40 basis points in 2025 and another 20-30 basis points in 2026, with a forecasted 10-year CGB yield of 1.5% by the end of 2025 and 2026 [24]. 6. Mixed Economic Growth: - November showed a mixed growth picture, with property sales rebounding to 3% YoY but new property starts declining by 27% YoY, impacting property investment and construction activities [10][11]. Additional Important Insights - Subway Passenger Turnover: The subway passenger turnover remained elevated, with growth increasing to 6% YoY in the first 17 days of December from 4% YoY in November [2]. - High Frequency Data: The Full-Truck-Load traffic index rose to 9% YoY in the first 19 days of December, compared to 1% YoY in November, indicating improved logistics activity [2]. This summary encapsulates the key points from the conference call, highlighting the current state and outlook of the Chinese economy, particularly in the real estate and automotive sectors, as well as the implications for monetary policy and government bond markets.