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China Chart Pack (Mar. 25) …
28th March 2025
Exports will take a hit soon The US vehicle tariffs announced this week will do little damage to China as its auto exports to the US account for less than 0.05% of GDP. But the “ reciprocal tariffs ” that President Trump is due to announce on Wednesday …
In this Update, we answer several key questions about how the announced 25% tariffs on US imports of autos and parts might affect the global economy and the US itself. Mexico, Slovakia and Korea are most exposed with up to 1.6% of GDP at risk. But the …
27th March 2025
Overview – Increased US tariffs will exacerbate a broader slowdown in exports. China’s economy will also face continued drags from the property downturn and wider deflationary dynamics. A sizeable fiscal loosening will provide a partial offset but won’t …
26th March 2025
It is becoming clear that President Trump’s actions are driven by both his fixation on reducing the US trade deficit and his transactional approach to dealing with other countries. So, even though the Trump administration’s ideas to transform the entire …
25th March 2025
Our China Activity Proxy suggests that China’s economy slowed over January and February, driven by a sharp slowdown in services sector growth. Fiscal expenditure is set to pick up over the coming months, but that will largely be offset by the drag from US …
24th March 2025
Structural weakness weighs on long-run outlook While China’s treasury yields have picked up in recent weeks, we don’t think that the trend decline of the last decade is over. We expect China’s 10-year government bond yield to fall below Japan’s this year, …
21st March 2025
China’s presence in Latin America is increasingly seen as a strategic threat by the US. This Focus uses interactive charts to map out economic, financial and institutional linkages between China and Latin America. While ties have expanded dramatically …
19th March 2025
Deflation has reared its head again in China, underscoring the problem of persistent supply and demand imbalances. The limited extra support for consumption outlined at the National People’s Congress and in the new “Special Action Plan” for consumption …
18th March 2025
China’s government has launched a new “Special Action Plan” to support consumption. Talk of prioritising consumption is encouraging on paper. But the leadership has been talking about this since a Politburo meeting in July. The latest plan doesn’t include …
17th March 2025
Recovery hits a speed bump China’s economy appears to have slowed last month, likely due to a pullback fiscal borrowing. We expect a renewed pick-up later this year as fiscal support ramps up again. But any near-term improvement is unlikely to be …
Bond market investors don’t seem to believe that monetary policy will be eased any further in China. Two-year yields have risen from 1.0% to 1.5% since the start of the year, putting them into line with overnight rates. They are higher now than they were …
14th March 2025
Broad credit growth picks up, but private demand still weak While bank loan growth continued to slow to record lows in February, that was more than offset by stronger growth in non-bank credit. Strong government bond issuance should continue to provide a …
Deflation fears return CPI joined PPI in deflationary territory last month for the first time in more than a year. While this was partly driven by the usual price volatility around Lunar New Year, the January-February average was also negative, evidence …
10th March 2025
NPC points to a renewed pick-up in fiscal spending The announcements out of the National People’s Congress (NPC) confirmed that China’s budget deficit will widen this year. But given the complexity of the Ministry of Finance’s fiscal projections, the …
7th March 2025
Foreign and domestic demand both under pressure Export growth cooled over the first two months of 2025, with tariff front-running providing less of a boost to demand than we had anticipated. This slowdown comes before any substantial hit from tariffs, …
Notice: This publication was revised on 07/03 to accurately reflect the deficit on the funds budget in 2024, taking into account the funds used for the local government refinancing scheme that year. The original version of the publication stated that …
5th March 2025
Little prospect of a reflationary rebound Chinese policymakers have stuck with an ambitious target for real GDP growth but have become more cautious on the outlook for nominal growth and inflation. And while they did deliver some increase in fiscal …
The events of the past two weeks have called into question whether the US is severing ties not just with adversaries such as China but also allies, including Canada, Mexico and the European Union. This would radically alter the shape of the fractured …
4th March 2025
Policy support struggling to deliver sustained rebound The PMIs suggest that a combination of fiscal support and tariff front-running helped China’s economy regain some momentum in February. But growth still looks at risk of slowing this quarter, at …
3rd March 2025
China Chart Pack (Feb. 25) …
28th February 2025
Fiscal deficit and consumption support will be key China’s National People’s Congress kicks off its annual gathering on Wednesday. While the meeting tends to last around a week, the most important events, including the delivery of the Work Report and …
With US tariffs now escalating, the key question is whether the People’s Bank (PBOC) will allow the exchange rate to adjust in response. We think it ultimately will, just as it did during the first trade war. But if we’re wrong and the PBOC attempts to …
President Trump’s attempts to reset relations with Russia have led some to suggest that he may be attempting to break apart the Sino-Russian alliance as Nixon did in the early 1970s (although in Nixon’s case, by reaching out to China). But while this may …
27th February 2025
Policy support is helping developers secure financing and should boost their sales this year. This will allow them to intensify work on existing projects. But it won’t prevent homebuilding activity from declining further over the coming years as the …
This year’s National People’s Congress (NPC) is taking place against a difficult backdrop for China’s economy; stimulus efforts have so far had only a fleeting impact on activity, even as the Trump administration has started raising barriers further to …
25th February 2025
President Trump has signalled that he is open to the possibility of a new trade deal with China, though probably not before tensions rachet up further. This would likely involve China committing to more purchases of US goods, particularly energy, …
Xi symposium cements shift toward private sector President Xi’s meeting with China’s top tech leaders on Monday and Alibaba’s strong earnings report yesterday have added fuel to market optimism around China’s tech sector. Since DeepSeek’s AI model …
21st February 2025
The decision by the US and Russia to “lay the groundwork” to end the war in Ukraine marks a potentially significant turning point after three years of conflict. Negotiations will take time and the macroeconomic implications will depend on the features of …
18th February 2025
Drop in marriages worsens demographic woes The number of marriages in China dropped by a fifth last year, more than reversing the immediate post-zero-COVID bounce that happened in 2023. Half as many weddings took place as a decade before. The decline …
14th February 2025
Policy support still struggling to provide much uplift to broad credit growth Bank loan growth continued to slide to record lows, but this was offset by a pick-up in non-bank credit growth. Robust government bond issuance should continue supporting credit …
China is among a minority of countries that apply lower tariff rates on the US than vice versa, so it is not as obviously exposed to reciprocal tariffs as many others. But President Trump’s latest announcement underscores just how serious he is about …
China added five critical minerals to its export control list last week but stopped short of banning their sale. The move was intended as a warning to the Trump administration and to increase China’s leverage during future negotiations. If the US …
12th February 2025
The end of the de minimis tariff exemption for US imports of low-value goods from China will be a major blow to Chinese e-commerce giants like Temu and Shein. They’re likely to lose market share to foreign competitors like Amazon. But unless tariffs …
11th February 2025
Rise in inflation likely temporary Headline CPI inflation rose to a five-month high last month, driven by the lagged effect of stronger demand last quarter on the back of government efforts to boost consumption. But with the boost from stimulus likely to …
10th February 2025
Consumption rebound looking shaky Growth in retail sales and wider consumer spending accelerated last quarter, buoyed by the consumer goods trade-in scheme and broader fiscal support. But this recovery appears to have stalled at the start of 2025. Both …
7th February 2025
After initially promising unspecified "countermeasures", the Chinese authorities have now fleshed out their retaliation to the Trump administration's 10% tariff hike on all US imports from China. The measures are fairly modest, at least relative to US …
4th February 2025
The additional 10% tariff that Donald Trump has applied on Chinese goods will have a relatively modest impact on China’s economy, especially if the PBOC allows the renminbi to adjust. But this is likely just the first round in a protracted trade war with …
3rd February 2025
Growth outlook continues to sour Hong Kong’s GDP growth picked up a touch in Q4, expanding by 2.4% y/y in Q4, up from 1.8% in Q4 (the Bloomberg median was +2.7% and our forecast was +2.3%). In q/q terms the economy grew by 0.8% after contracting by 1.1% …
DeepSeek doesn’t mean China is overtaking in AI US markets reeled at the start of this week as DeepSeek’s launch of a “reasoning” model similar to the leading offering from OpenAI focused attention on the Chinese firm’s success in developing …
31st January 2025
The economy should accelerate over the near-term, driven by consumption-boosting policy support. But the stimulus-driven recovery will be short-lived. We expect growth to slow later in the year, as the impact of stimulus fades and US tariffs create a …
DeepSeek’s success in developing AI models that rival those of US tech-giants has rattled US markets. While this does suggest that catching up to the technological frontier in AI may be easier than many expected, it is not a sign that China is overtaking …
30th January 2025
Our China Activity Proxy suggests that activity picked up in December, but that was only enough to drive a modest uptick over Q4 as a whole. The CAP indicates that the economy grew by just 4.4% in 2024, well below the official figure of 5.0%. As a result …
28th January 2025
The raft of export restrictions introduced earlier this month are the latest escalation in China’s shift to a more assertive export control regime. The use of such non-tariff measures is likely to intensify over the coming years, if as we anticipate, …
27th January 2025
An unexpected loss of momentum The PMIs suggest that China’s economy lost some momentum in January, despite tailwinds from recent policy easing. The breakdown suggests that exporters were downbeat even ahead of Trump's latest tariff announcement. But …
Uncertainty over Trump’s tariff plans We still have little clarity on the timing or size of any tariff increases President Trump is planning to impose on China. On the one hand, Trump has threatened a 10% tariff to take effect on 1 st February in response …
24th January 2025
China’s surging exports have been gaining international attention, but concerns about overcapacity have focussed on “strategic sectors”. Far less acknowledged is the fact that China has been gaining significant global export market share across the board, …
22nd January 2025
Biden's final export control crackdown In the final days of his administration, Biden has (yet again) ramped up US export controls in a bid to slow China’s development of advanced AI. The new Interim Final Rule on Artificial Intelligence Diffusion …
17th January 2025
The Shape of the Fractured World in 2025 The share of the fracturing global economy that is accounted for by China and its geopolitical allies contracted in 2024, leaving it under a third the size of the US bloc at the start of 2025. This fall was in part …
Fiscal-driven recovery will be short-lived The economy ended 2024 on a stronger note, thanks to tailwinds from recent policy easing. Increased fiscal spending should continue to provide a near-term prop to activity, but this won’t prevent growth from …
