Novel Data on China's Auto Loans - An Inefficient Market

Novel Data on China's Auto Loans - An Inefficient Market

The continued growth of China’s auto sales has relied increasingly on consumer credit, according to the WSJ; but, granular data is hard to come by. So, we created a process to collect, clean, and structure data from online auto loan offerings. Our findings imply that the auto loan market, like many credit markets in China, runs on two parallel tracks, and is woefully inefficient.

Contact us for the complete auto loan data set.

Novel Data on China's Mortgage Loans

Novel Data on China's Mortgage Loans

China’s banks are directed by the state, without irony, to “vigorously promote reasonable home ownership.” Their most recent annual reports repeatedly bury in the notes this line, or some variant of it, as an explanation for the explosion of mortgage lending over the previous 12 months. Granular mortgage data however, is hard to come by – so we created a process to collect, clean, and interpret that information.

China's Unsolved Liquidity Risk

China's Unsolved Liquidity Risk

Last week, the IMF published the results of its 2017 Article IV consultation with China observing that the credit gap, the difference between the country’s current credit-to-GDP ratio compared to its historical trend, has begun to moderate – a sign for tempered optimism. However, I believe this is a flawed indicator and I propose a separate quantitative measure to track China’s debt-related macroeconomic risk.

An Inflection Point in China's Systemic Risk

An Inflection Point in China's Systemic Risk

Chinese banks have reached an inflection point in the accumulation of investment receivables assets, a source of systemic financial risk. However, given the incentives of regulated institutions everywhere, it is likely that risks have simply begun to migrate to new and more opaque parts of the balance sheet. As China watchers, we should prepare for yet another game of financial risk whack-a-mole.

A Primer on China's Financial Data Quality

A Primer on China's Financial Data Quality

Chinese data is bad.

Terrible actually, when compared to the financial data standards of the top global economic powers. That statement is a matter of empirical observation, which we will explore later, but it also reflects a consensus and Narrative surrounding the ‘China Story.’ Like all capital-N Narratives, while this one did originate in truth, it now oversimplifies the matter and obscures subtleties which should be important to all strains of China watchers.

Identifying SOEs

Identifying SOEs

Investors have long shunned China’s state-owned enterprises (SOEs) over concerns of misaligned incentives between companies’ management and their shareholders. However, as with most things in China, determining the influence of the state in a given company, and what that means for investors, is a surprisingly nuanced exercise. Ownership is one measure, but financial, management or other avenues of control exist as well.