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Services weakness holding back growth The official PMIs suggest that infrastructure spending is ramping up again and that exports have so far remained resilient in the face of US tariffs. But the surveys are still consistent with slower GDP growth Q1 amid …
31st 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 …
17th 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 …
14th March 2025
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
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, …
7th 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 …
5th 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
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
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 …
14th 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
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% …
3rd February 2025
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 …
17th January 2025
Broad credit growth rebounds despite weak private demand Broad credit growth rebounded last month, but bank loan growth continued to hit record lows . We expect robust government bond issuance to continue supporting credit growth over the coming quarters. …
14th January 2025
Exports to remain strong until Trump tariffs hit Export growth rebounded last month, with both export values and volumes posting double-digit y/y gains. We expect shipments to remain strong in the coming months, as US importers continue to stockpile …
13th January 2025
Uptick in underlying inflation consistent with demand recovery Headline CPI inflation fell last month but this was driven by weather-related volatility in food prices. More important is that core CPI and PPI both picked up, adding to signs that policy …
9th January 2025
Non-manufacturing sector recovers strongly This report was first published on the 31 st December covering the official PMIs. We added commentary on the Caixin manufacturing PMI on 2 nd January and the Caixin services and composite PMIs on 6 th January. …
31st December 2024
An unexpected loss of momentum China’s economy appears to have slowed last month, despite tailwinds from recent policy easing. Growth still looks on course to pick up this quarter, but the disappointing November data underscores the challenge policymakers …
16th December 2024
Monetary easing still struggling to put a floor under borrowing Broad credit growth stabilised last month, after hitting a 21-year low in October. But bank loan growth continued to slide to fresh lows, despite lending rates on new loans having been …
13th December 2024
Export volumes have further to rise, despite tariff threat Export growth slowed sharply last month but we doubt this signals the end of China’s recent export boom. We expect exports to accelerate again in the coming months, supported by gains in …
10th December 2024
Leadership alters formal characterisation of monetary policy The Politburo has just concluded its December meeting, which focuses foremost on economic affairs. After 14 years of monetary policy being officially characterised as “prudent”, the meeting …
9th December 2024
This page has been updated with additional analysis since first publication. Stimulus is propping up inflation Headline CPI inflation fell but this was mainly driven by easing upward pressure on food prices. Core inflation edged up and PPI deflation …
Economy regains momentum as consumers step up China’s economy improved further at the start of Q4, thanks to stronger-than-expected consumer spending. We think faster fiscal spending will support a continued cyclical pickup in activity overing the coming …
15th November 2024
Stimulus too small to turn around credit growth Both bank lending and broad credit growth hit fresh lows in October in a sign that monetary easing hasn’t done enough to drive a substantial turnaround in private credit demand. And after last week’s …
12th November 2024
This page has been updated with additional analysis since first publication. Deflationary pressures ease slightly but still pose a risk Headline CPI and PPI inflation both fell further in October. But core inflation edged up and factory gate prices fell …
11th November 2024
Unless there’s more to come later this evening, today’s fiscal announcement is another disappointment for those expecting substantial stimulus. The key measure announced at a press conference earlier is a refinancing of local government debt. Local …
8th November 2024
Exports to remain robust in the near term despite Trump victory Export values grew y/y at the fastest pace in more than two years, and export volumes picked up too. We expect shipments to stay strong in the coming months – any drag from potential Trump …
7th November 2024
Weak external demand results in a sharp slowdown Hong Kong’s economy contracted sharply in Q3. GDP surprised significantly to the downside, with growth of 0.4% q/q in Q2 more than reversed by a 1.1% q/q fall in Q3 (Bloomberg median: +0.2%, CE: -0.2%). In …
31st October 2024
The PBOC continues to support the economy Today’s reductions to both the one-year and five-year Loan Prime Rates (LPR) continue the PBOC’s efforts to support the economy. We expect additional easing to follow in the coming quarters, but this is unlikely …
21st October 2024
Recovery still shaky, underscoring need for fiscal boost After slowing in Q2, the economy regained some momentum last quarter. A boost from fiscal stimulus should help narrowly meet the annual growth target this year and support activity in the coming …
18th October 2024
Credit growth still slowing, highlighting need for larger fiscal response Despite monetary easing and a pick-up in government bond issuance, both broad credit and bank loan growth hit fresh lows in September. While the PBOC will continue to loosen policy, …
14th October 2024
Exports still strong but headwinds emerging Export growth slowed last month but remained resilient, with volumes still rising at a double-digit pace. We think shipments will stay strong in the near term, supported by gains in export competitiveness. …
Fiscal boost needed as deflationary pressures build CPI inflation fell in September, as an increase in food inflation was outweighed by further decreases in energy and core inflation. Meanwhile, producer price deflation deepened further on the back of …
This page has been updated with additional analysis since first publication. Stimulus measures will shore up near-term activity While the official PMIs held up okay in September, the Caixin PMIs dropped quite sharply which suggests that the economy lost …
30th September 2024
Leadership hints at further stimulus measures The readout of the Politburo’s quarterly meeting on economic affairs has just been published by state media. It acknowledges that new problems have emerged in the Chinese economy recently and calls for …
26th September 2024
But still falls short of what’s needed In a departure from their previous approach of drip-feeding piecemeal support measures, China’s financial regulators have just announced a coordinated package of stimulus measures. This is a step in the right …
24th September 2024
The PBOC fails to deliver cuts The lack of any reduction to policy rates today, despite the clear economic case for doing so, underscores the extent to which the PBOC remains constrained by concerns about bank profitability and declining long-term bond …
20th September 2024
Renewed slowdown in credit Both broad credit and bank loan growth slowed in August, coming in below expectations. (See Chart 1.) While stronger government spending should give the economy a boost over the coming months, that doesn’t seem likely to be …
13th September 2024
Exports set to remain a near-term bright spot Export values grew y/y at the fastest pace in 17 months, with export volumes hitting record highs. We expect exports to remain robust in the near term, supported by the decline in China’s real effective …
10th September 2024
This page has been updated with additional analysis since first publication. Overcapacity continues to weigh on prices Despite a weather-related surge in vegetable prices, a fall in energy prices and core inflation meant CPI only rose a touch. Meanwhile, …
9th September 2024
The PBOC has just revealed that it purchased RMB400bn of government bonds from primary dealers today. This might seem like an odd move given that the central bank has spent recent months trying to prevent yields from falling. But most signs suggest that …
29th August 2024
Deceleration eases with growth nearing turning point After slowing in Q2, economic momentum appears to have stabilised somewhat last month, with a pick-up in consumer spending and services activity largely offsetting a slowdown in investment and …
15th August 2024
Credit growth starts to recover, private demand still weak Broad credit growth ticked up in July, while bank loan growth only slowed a touch. (See Chart 1.) We expect a continued acceleration in government bond issuance to support a further expansion of …
13th August 2024
Food prices drive up inflation but domestic demand remains weak Consumer price inflation ticked up in July, but this was entirely due to a weather-related rise in food price inflation. Producer price deflation was unchanged. While a ramp-up in fiscal …
9th August 2024
Exports to stay robust, helped by NEER depreciation Growth in export values slowed last month, but this was mainly due to lower export prices. Export volumes remained near record highs. We expect outbound shipments to stay strong for a while, not least …
7th August 2024
External demand no longer driving growth Hong Kong’s GDP growth slowed significantly in Q2, with activity expanding by just 0.4% q/q, down from a strong 2.3% q/q expansion in Q1, although this was slightly stronger than both we and the consensus expected …
31st July 2024
Leadership flags increased policy support but offers few new ideas The readout of the Politburo’s latest triannual meeting on economic affairs has just been published by state media. It was dovish in tone and adds to recent evidence that the leadership …
30th July 2024
Surprise cut points to mounting policymaker concern The PBOC’s decision to cut the 1-year interest rate on its medium-term lending facility (MLF) earlier today is unusual for two reasons. First, the 20bp reduction is double the size of the PBOC’s usual …
25th July 2024
PBOC responds to leadership's call for more easing The PBOC has lowered its short-term policy rate for the first time since last summer, in line with our expectation for a cut this quarter. Its efforts to prevent long-term yields from falling therefore do …
22nd July 2024
This page has been updated with additional analysis since first publication. Growth slowed last quarter but should regain some ground in H2 Weaker-than-expected official GDP figures show that China’s economy lost momentum in Q2. But we doubt this marks …
15th July 2024
Credit growth hits a new low Both bank loan and broad credit growth hit a record low in June. While further fiscal loosening may provide some support to credit growth in the near-term, the continued weakness of the property sector means that any increase …
12th July 2024
