China hints at more stimulus in boost to metal demand prospects...

China hints at more stimulus in boost to metal demand prospects

• China revealed broad guidelines overnight to provide targeted stimulus to various sectors considered of national importance.
• The PBoC suggests that surprise cuts, like Wednesdays, will become less frequent.
• However, credit will be provided to sectors struggling under specific pressures.
• Xi Jinping’s China is under increasing strain economically, as the housing market continues to deflate and growth disappoints.
• $279bn is being provided to agriculture and small firms in the form of low cost financing.
• We remain wary whether metals demand will see a sustained pick up in demand from such measures but they do provide investors with more confidence in Beijing.
• The market remains wary of the potential for further financial collapse following the Zhongzhi bankruptcy and liquidation with >$36,4bn of estimated net debt

• New car sales are expected to rise 3% yoy to around 31m units following sales of 2.2m vehicles in January.
• EV sales pulled back 15% mom to around 800,000 vehicles though figures are distorted by China’s emergence from its harsh Lockdown in January 2023 following a series of riots and factory breakouts in the preceding months.
• Fitch Ratings review published today show Q4 promotions and deep discounting last year boosted year-end sales by 5.3% yoy.
• EV sales rise 35.7% in 2023 from 27.6% a year earlier lifted by an 83% rise in in PHEVs while battery EV sales slowed 21% last year.

Further stimulus for urban renewal means >100 cities are now eligible for new economic housing development.

• Chengdu-Chongqing economic circle achieved a regional GDP of CNY5.9tn in first nine months of the year with Chongqing recording GDP of >CNY3tn for the full year.
• The cities are co-building a Belt and Road Cooperation Zone for Science, Technology and Innovation allowing with other plans covering CNY3.6bn for infrastructure and property development this year following on similar expenditure in H1 last year.