China Economics Update Watch the PMIs (or the CAP), not the Conference Board The negative reaction to what was in other respects an unimportant downward revision to the Conference Board’s leading indicator for April probably says more about the fragility of market confidence... 1st July 2010 · 1 min read
China Economics Update First thoughts a week into currency reform In the first week after the People’s Bank (PBC) decided to “proceed further” with exchange rate reform, the renminbi strengthened a total of 0.5% against the dollar. A little under half of those gains... 25th June 2010 · 1 min read
China Economics Update Hot inflows not likely to be a major threat With expectations for the pace of future renminbi appreciation low, speculative capital flows into China are unlikely to take off. Even if they do, the People’s Bank is capable of responding... 23rd June 2010 · 1 min read
China Economics Update Still in need of rebalancing The financial crisis has left many reputations looking rather tattered. China’s policymakers are among a small group who have emerged with their standing enhanced. Acting boldly and swiftly, they not... 22nd June 2010 · 1 min read
China Economics Update Lessons from 2005 for the renminbi The renminbi came close to breaching the People’s Bank 0.5% trading band against the dollar today, however such strong gains are unlikely to be a sign of what is to come. Indeed, when currency reform... 21st June 2010 · 1 min read
China Economics Update Renminbi reform restarts Proof will come in the next day or two, but the decision of the People’s Bank to “proceed further” with exchange rate reform almost certainly means the renminbi’s hard dollar peg is at an end. 20th June 2010 · 1 min read
China Economics Update How many young workers are there? There may be 31 million fewer Chinese aged under 15 than previously thought. If so, the number of young workers will soon be falling rapidly, putting sustained upward pressure on wages. 18th June 2010 · 1 min read
China Economics Update The view from the ground – Q2 2010 China’s businesses and banks are still confident and do not think the economy is overheating, but consumers are unhappy about prices and wages and reluctant to spend. Mortgage demand is down and few... 17th June 2010 · 1 min read
China Economics Update Do wage increases reduce the need for currency appreciation? Rapid wage increases may play a big role in rebalancing China’s economy in the years ahead. In the short term though, they are no substitute for nominal currency appreciation. 15th June 2010 · 1 min read
China Economics Update Diminishing inflation threat should keep rates on hold Consumer price inflation has just edged above 3% but with price pressures still low and output growth already slowing, there is no pressing need to tighten policy. Indeed, we no longer expect interest... 11th June 2010 · 1 min read
China Economics Update Inflation Monitor (May) Inflation probably rose to 3% in May, but the bigger picture is that the threat of overheating already appears to be dissipating. We now expect inflation for the year as a whole to come in below the... 7th June 2010 · 1 min read
China Economics Update How much should we care about Chinese equities? We expect a big rebound in Chinese equity prices in the second half of 2010 as fears about policy tightening wane and the economy heads to a soft landing. However, rising prices will not give much of... 3rd June 2010 · 1 min read
China Economics Update Gliding to a soft landing A few weeks ago, the common view was that China was overheating and so heading for a crash. (We strongly disagreed.) The mood now seems to be shifting, partly due to worries about the global outlook... 28th May 2010 · 1 min read
China Economics Update Is China finally rebalancing? How much progress has there been in efforts to rebalance China’s economy? US Treasury Secretary Tim Geithner is positive, saying that “it looks as if there has been a durable shift towards domestic... 27th May 2010 · 1 min read
China Economics Update What did we learn at the US-China Dialogue? Markets have reined in even further their expectations of renminbi appreciation and are now pricing in a meagre 0.6% gain against the dollar over the next 12 months. That is surely too little. Indeed... 25th May 2010 · 1 min read
China Economics Update How will Europe’s troubles affect China’s currency policy? Worries about Europe have prompted us to revise down our forecasts for the renminbi’s future pace of gains, but we still expect appreciation against the dollar to resume at some point between next... 19th May 2010 · 1 min read
