The drums continue to beat on this idea that China has stuck the landing, and that some re-acceleration in growth is occurring.
Goldman’s Jim O’Neill made the argument for that in a well-traveled note this weekend.
The latest crumb of evidence: Morgan Stanley’s John Lam held some calls/visits with Chinese cement makers, and liked what he heard.
All cement producers we met have registered strong sales volumes since August across different regions in China: The reasons: 1) Better weather 2) Infrastructure demand 3) Strong rural demand Property demand remains the same. This is in line with the macro data points, such as accelerating cement production growth in September and infrastructure spending. We believe the strong infrastructure spending reflects: 1) Better liquidity in China, reflecting a rising proportion of medium- to long-term loans 2) Better funding for local governments thanks to the recent pickup in land sales.
It’s not all amazing news. He goes onto note that some of the rural demand for cement is the result of migrant workers giving up on the city, going back to the village, and building homes.
But the fact of the matter is that growth seems to be coming back.
Here’s the key chart:
Photo: Morgan Stanley
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