China Economics Update The PBOC remains in easing mode The People’s Bank has made another small downward adjustment to the rates it charges banks for short-run liquidity. We expect further cuts in the coming months, which will open the door to lower... 18th December 2019 · 2 mins read
China Economics Update What to expect in 2020 Domestic headwinds will continue to weigh on growth next year, even as the external environment starts to improve. We expect this to trigger additional policy easing, with the PBOC likely to cut rates... 12th December 2019 · 4 mins read
China Economics Update PBOC cuts feed through to lower bank rates The latest Loan Prime Rate (LPR) reductions confirm that banks are lowering lending rates on new loans in response to the recent cuts to the PBOC’s lending facilities. And policymakers’ willingness to... 20th November 2019 · 3 mins read
China Economics Update PBOC nudges down its floor on interbank rates For the first time this easing cycle, the People’s Bank has cut the rate it charges banks for short-run liquidity. We expect further cuts in the coming months, which will open the door to lower... 18th November 2019 · 3 mins read
China Economics Update How much does Hong Kong’s special status matter? If Hong Kong’s special treatment under US law were revoked, the city would lose access to sensitive US technology and face an increased threat of US tariffs. The short-term economic damage would be... 11th November 2019 · 3 mins read
China Economics Update The PBOC’s inflation dilemma The People’s Bank is powerless to stop consumer price inflation jumping above its target without undermining its broader mandate to support growth and employment. Given this trade-off we expect the... 11th November 2019 · 2 mins read
China Economics Update PBOC turning more proactive After keeping interbank rates broadly stable for most of this year, the People’s Bank (PBOC) is starting to take more direct steps to push down borrowing costs. We think this could mark the beginning... 5th November 2019 · 2 mins read
China Economics Update Construction strength offset by industry weakness The detailed breakdown of China’s Q3 GDP data released today shows that a slowdown in industry overshadowed strength in the construction sector. The headwinds to the construction sector should only... 21st October 2019 · 3 mins read
China Economics Update Easing yet to come The newly-revamped Loan Prime Rate (LPR), the reference point against which banks now price loans, was unchanged in October. This will only increase pressure on the PBOC to ease funding costs for... 21st October 2019 · 3 mins read
China Economics Update US and China no closer to a lasting resolution The US is attempting to pluck low-hanging fruit first, rather than hold out for a more complete trade deal with China. But reaching an agreement on the more contentious structural issues remains an... 14th October 2019 · 4 mins read
China Economics Update Another small step towards lower rates The newly-revamped Loan Prime Rate (LPR), the reference point against which banks now price loans, came in slightly lower for September. We think that more decisive cuts will materialize before long. 20th September 2019 · 3 mins read
China Economics Update Monetary policy has lost its oomph The ability of monetary easing to stimulate credit growth in China has diminished and we think this will lead the People’s Bank to pull down interbank rates further than most anticipate. But even this... 19th September 2019 · 4 mins read
China Economics Update Swine fever inflation shock to worsen Intervention by China’s government to halt the spread of African Swine Fever (ASF) and mitigate its impact on pork prices is proving ineffective. Inflation will next year rise above the government’s... 12th September 2019 · 3 mins read
China Economics Update Hong Kong’s banks can weather the storm Early-warning indicators suggest that Hong Kong’s banking system is primed for a crisis. And banks face multiple shocks from an economic recession, a housing market correction and capital outflows... 10th September 2019 · 5 mins read
China Economics Update RRR reduction to be followed by PBOC rate cuts The PBOC will release a portion of the reserves commercial banks’ hold at the central bank. While this will pull down interbank rates in the short run, the PBOC will need to cut its policy rate to... 6th September 2019 · 3 mins read
China Economics Update Transhipments and weaker RMB are blunting US tariffs China’s share of global exports has increased over the past year, despite US tariffs. Renminbi depreciation and the transhipments of goods to the US via neighbouring countries can take much of the... 29th August 2019 · 3 mins read
