China Economics Update What can policymakers do now? The failure of Saturday’s policy moves to lift equity prices for more than a few minutes at the start of trading today has focused attention on what else policymakers might do to support the markets... 29th June 2015 · 1 min read
China Economics Update Economic downside from equity collapse underappreciated A “best case” scenario is that a continued equity collapse would knock a percentage point off China’s GDP growth simply by cooling currently overheated financial sector activity. But the rapid... 26th June 2015 · 1 min read
China Economics Update Scrapping the loan-to-deposit ratio won’t boost bank lending A new proposal to do away with the loan-to-deposit ratio won’t relax the primary constraints on bank lending. It should, however, mean that a greater share of lending is directed towards smaller and... 24th June 2015 · 1 min read
China Economics Update The view from the ground – Q2 2015 China’s banks are reporting a deterioration in loan demand that raises questions about the effectiveness of recent policy loosening. We put more weight on actual lending, which has remained strong... 19th June 2015 · 1 min read
China Economics Update Severe demographic headwinds to hold back Hong Kong Hong Kong has both the highest life expectancy and the lowest birth rate in the world. One consequence is that Hong Kong’s working age population is set to decline by more than that of any other... 16th June 2015 · 1 min read
China Economics Update Local government debt swap doubled Today’s doubling of the quota for local government debt swaps indicates that the central government believes the programme has so far been a success, even if banks have only been buying the new bonds... 10th June 2015 · 1 min read
China Economics Update Price pressures on the rise A seasonal slide in vegetable prices that should prove short-lived may have pulled inflation down in May. But the bigger picture is that underlying price pressures appear to have picked up. We expect... 5th June 2015 · 1 min read
China Economics Update More evidence GDP growth overstated Flaws in how China’s GDP data are calculated exaggerated both the downward pressure on prices in the first quarter and the rate at which the economy is growing. 4th June 2015 · 1 min read
China Economics Update Equities on a rollercoaster This month ended with a crash on China’s stock markets. But if the equity bubble of 2007 is any guide, this may not be the end of the speculative rally. 29th May 2015 · 1 min read
China Economics Update Are policymakers pushing on a string? The failure of policy loosening over the past six months to stimulate an economic rebound has led some to suggest that elevated real interest rates or oppressive debt burdens are hobbling corporate... 29th May 2015 · 1 min read
China Economics Update Fiscal policy to be more supportive in coming quarters Policymakers are moving to ensure that funding difficulties don’t disrupt local government spending plans. This doesn’t constitute an about-turn in efforts to restrict off-budget borrowing, as some... 18th May 2015 · 1 min read
China Economics Update Deposit rate liberalisation still on track Stories that the PBOC banned banks from increasing deposit rates when it raised the deposit rate ceiling at the weekend are another sign of policymakers’ ambivalence towards the use of market-oriented... 15th May 2015 · 1 min read
China Economics Update Chinese tourists to keep current account surplus in check China’s goods trade surplus last year was a third higher in dollar terms than at the previous peak in 2008. Yet the country’s current account surplus – the broadest measure of its economic imbalance... 12th May 2015 · 1 min read
China Economics Update PBOC injects another 25bp of support Today’s cut to benchmark interest rates is not a sign of panic as some will argue but a rational response to weaker-than-expected data. Policymakers have room to act more forcefully if needed but are... 11th May 2015 · 1 min read
China Economics Update Gains from migration haven’t been exhausted Migration into China’s cities appears to be slowing but the economic gains it has brought are far from drying up. Improvements to agricultural productivity should free up rural labour for years to... 6th May 2015 · 1 min read
China Economics Update Why the RRR is still an effective policy tool in China There appears to be a great deal of confusion around how cuts to the required reserve ratio (RRR) affect China’s economy, with some even suggesting that changes to the RRR have no impact on monetary... 4th May 2015 · 1 min read
