Filtered by Subscriptions: China Economics Use setting China Economics
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 …
28th 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
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
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
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 …
28th February 2025
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
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
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
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
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
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
PBOC will retreat if tariffs are imposed Shortly after Trump’s election victory, the PBOC began to hold the daily fixing rate steady at 7.19/$, thereby keeping the weak edge of the currency’s trading band at 7.33/$ and suggesting to us that it was …
10th January 2025
Markets don’t believe easing will deliver China’s central bank is trapped between the leadership’s incompatible desires to ramp-up monetary support for the economy, while keeping the currency stable and at the same time sending a message that its policy …
20th December 2024
B ut a dramatic shift in policy approach still unlikely The Central Economic Work Conference (CEWC), an annual gathering at which China’s leadership discusses targets and priorities for the following year, concluded yesterday. We discussed the key …
13th December 2024
New rules are more restrictive but leave loopholes The updated US semiconductor export controls published on Monday will further limit China’s ability to manufacture advanced semiconductor chips. The 200+ pages of legislation contain many intricacies, but …
6th December 2024
Trump links some tariffs to the drug trade Earlier this week, President Trump threatened to impose an “additional” 10% tariff on imports from China, along with tariffs on Mexico and Canada. We gave our initial thoughts here , noting that because the …
29th November 2024
Local governments ramp up support Efforts by the Ministry of Finance (MoF) to get local governments to make greater use of their existing fiscal space are starting to pay off. Data published this week showed that fiscal spending accelerated sharply in …
22nd November 2024
What next after the fiscal flop? Investors were not impressed by the fiscal measures announced last Friday, at least judging by the performance of Chinese equities – the Hang Seng index has fallen 6.1% so far this week. This disappointment is …
15th November 2024
Exporters could do even better in the near-term We published our initial thoughts on the impact of a second Trump presidency on China’s economy here . Counter-intuitively, perhaps, we concluded that there would be initial upside for exporters, as US firms …
8th November 2024
It’s still unclear if consumption will be prioritised Over the weekend, the Vice Finance Minister confirmed that the NPC Standing Committee is set to approve a fiscal package at its upcoming meeting , set to last from Monday to Friday of next week. At a …
1st November 2024
Fiscal package may be revealed in two weeks At its 12 th October press conference, the Ministry of Finance (MoF) offered some reassurances that fiscal spending would pick up in the final months of this year and stay supportive into 2025. But it didn’t …
25th October 2024
No gamechangers, but some new approaches The housing ministry’s press briefing on Thursday left investors understandably underwhelmed: there were no substantial new measures and little new detail on plans to support the property sector. The Hang Seng …
18th October 2024
Consumer support and a larger deficit Tomorrow’s press conference will provide a platform for the Ministry of Finance (MoF) to reveal its fiscal plans. The stakes are high - most observers agree that recent stimulus announcements won’t amount to much …
11th October 2024
CNY nears strong end of its trading band We regret to inform our readers that the chart and analysis in this section contained errors. We have added a corrected chart below. The original chart and analysis have also been retained for reference but should …
4th October 2024
Stimulus implementation gets underway A flurry of policy announcements propelled the largest weekly gains in Chinese equities since 2008 this week (CSI 300 up 15.7%; Hang Seng 13.0%). The catalyst was Tuesday’s stimulus announcement , which included …
27th September 2024
Tailwind from Fed’s easing cycle will be small The US easing cycle that got underway with a 50bp cut this week will provide a boost to economic activity in Hong Kong, where a fixed exchange rate means interest rates track those in the US. We expect the …
20th September 2024
A temporary boost to employment growth After years of delay, China’s legislature today passed a bill that raises the statutory retirement age for the first time since 1978. In January, it will increase from 60 to 63 for men, 55 to 58 for white-collar …
13th September 2024
What will the US election mean for Asia's growth outlook? Will China's strength in emerging technology help it overtake the US? Is India doing what is needed to fulfil its growth potential? We’re tackling these issues and more in an Asia roundtable in …
6th September 2024
Canada joins tariff hiking club On Monday, Canada announced a 100% tariff on imports of Chinese electric vehicles and 25% tariffs on aluminium and steel. The tariffs themselves won’t have much of a macro impact – the affected goods make up less than 0.1% …
30th August 2024
Still trying to fix the destocking scheme At a press conference today, the Ministry of Housing pledged to accelerate the purchase of unsold homes for conversion into affordable housing. Exactly how it intends to go about that is unclear. The national …
23rd August 2024
Corporate borrowing still growing at a decent clip China’s July credit data came in weaker than expected on Wednesday. In particular, despite the PBOC cutting the loan prime rate last month, net new bank loans to the real economy turned negative for the …
16th August 2024
US recession risks yet to derail export outlook The recent batch of weaker-than-expected US data rattled global markets this week. But it hasn’t significantly altered China’s economic outlook. Admittedly, the risk of a US recession, which would hurt …
8th August 2024
We've been here before We wouldn’t take Tuesday’s pledge from the Politburo to tilt stimulus towards consumption at face value. The leadership called for policies to lift incomes and enhance the capacity and willingness of low- and middle-income groups to …
2nd August 2024
Growing drumbeat of support measures Policymakers’ concerns about the near-term outlook have become much more visible over the past couple of weeks. First, they took the unusual step of discussing the current economic situation in the Third Plenum …
26th July 2024
GDP breakdown points to weaker services activity The lower-than-expected Q2 GDP figures released earlier this week suggest that China’s economy has lost some momentum recently. The detailed sectoral breakdown, published a day after the headline data, …
19th July 2024
PBOC tweaks policy framework The PBOC expanded its toolkit this week to help strengthen its day-to-day management of interbank rates. In addition to the repo operations it conducts each morning, mostly at 7-day maturities, the bank will also perform …
12th July 2024
Drop in long-term yields has made PBOC uneasy On Monday, the PBOC announced that it would start borrowing Chinese government bonds (CGBs) from primary market dealers (i.e. the major banks). While it didn’t elaborate further, the aim is clearly to shore up …
5th July 2024
Supply-side reform won’t fix consumer weakness This week, the government published guidelines on creating “new consumption scenarios” with the aim of “coordinating the expansion of domestic demand while deepening supply-side structural reforms”. We’ve …
28th June 2024
Bond buying redux PBOC Governor Pan Gongsheng this week again flagged the PBOC’s plans to start buying and selling government bonds and again argued that this wouldn’t constitute QE. (See our earlier discussion of the issue here .) The purpose of the new …
21st June 2024
Still a bright future in Europe China protested the European Commission’s (EC) imposition of additional tariffs on Chinese-made EVs this week but, if the EU goes no further, China’s government is likely to see this as a good outcome. The European tariffs, …
14th June 2024
Trade barriers doing little to slow influx of goods Trade data published today showed that Chinese exports remained on a tear in May, rising 14.5% y/y in volume terms. This will add to concerns in Western countries about the influx of Chinese goods, which …
7th June 2024
Government spending set to reaccelerate The official PMIs for May published today were disappointing. Taken at face value, they imply that the improvement in economic momentum earlier this year has stalled. One reason appears to be that government …
31st May 2024
Pullback in deposit growth is not a bullish signal After picking up during the pandemic, growth in bank deposits has slowed sharply recently. (See Chart 1.) They even fell outright in April, by a record RMB3.9trn, though this may partly reflect …
24th May 2024
Property support ramps up The PBOC today announced major changes to property controls, including removal of regulatory floors for mortgage rates and a lowering of the minimum downpayment to 15% for first homes and 25% for second homes, 5%-pts lower than …
17th May 2024
Battery production rules aim to limit overcapacity There was a concerted effort this week, across state media and from Xi Jinping himself, to push back against foreign suggestions that China’s rising exports of “new energy” products reflect overcapacity …
10th May 2024
Policy hasn’t kickstarted lending to developers Bank lending decelerated to its slowest pace on record in March. The sectoral breakdown released this week provides some insight into what’s been behind the slowdown. The big picture is that the property …
3rd May 2024
New monetary tool aimed at risk mitigation, not QE Speculation had emerged that the PBOC might start quantitative easing (QE) after it was revealed earlier this month that President Xi Jinping had called on the central bank to increase the buying and …
26th April 2024
GDP breakdown points to stronger services activity The better-than-expected Q1 GDP figures released earlier this week added to wider evidence that the economy has regained some momentum recently. The detailed sectoral breakdown, published a day after the …
19th April 2024
Strong US CPI puts further pressure on the RMB The stronger US CPI print on Wednesday pushed back expectations for Fed rate cuts. Most currencies depreciated against the US dollar as a result. But, while the offshore renminbi weakened 0.4% on Wednesday, …
12th April 2024
PBOC eases auto loan policy to stimulate demand On Wednesday, the PBOC scrapped the regulatory minimum down payment for car loans on all passenger vehicles, giving banks the freedom to offer higher loan-to-value ratios. This latest attempt by the central …
5th April 2024
