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Yesterday’s official PMI reading had hinted at growth having remained broadly stable last month. But today’s downbeat unofficial PMI suggests conditions may not have held up as well as previously thought. … Caixin Manufacturing PMI …
1st June 2017
China’s markets were left unfazed by the ratings downgrade last week. But there have been some sizeable gains since then in the renminbi as policymakers have signalled their determination to prevent the currency from weakening. We have tweaked our …
31st May 2017
The latest official PMI readings add to broader evidence that downward pressure on growth has eased lately. We expect this stability to prove short-lived. … Official PMIs …
The change in the renminbi fixing mechanism announced today shouldn’t rattle markets, not least because it appears to be an attempt to strengthen rather than weaken the currency. It suggests though that policymakers’ tolerance for letting market forces …
26th May 2017
The ongoing regulatory crackdown on banks’ off-balance-sheet activities has contributed to the mild slowdown in growth we’ve seen recently. But it is also bringing into focus the challenges that China’s policymakers face in putting credit growth onto a …
25th May 2017
Today’s ratings downgrade reveals little that investors didn’t already know about credit growth in China and the risk that it requires the government to accept a big increase in its debt load in future. The greater concern though, we believe, should be …
24th May 2017
Our China Activity Proxy (CAP) shows growth stayed in April at the slowest pace in half a year. Looking ahead, as officials continue their efforts to rein in credit risks, we think activity will slow further in the quarters ahead. … Growth remains at …
After a sharp decline at the start of the year, net capital outflows have crept up again recently. Unless we witness another misstep on exchange rate policy though, outflow pressure should remain manageable. … Capital Flows Monitor …
23rd May 2017
Regulators this week approved a scheme that will allow investors with brokerage accounts in Hong Kong to invest directly in mainland bond markets, set to be launched before the end of this year. But while the announcement has drawn attention to China’s …
17th May 2017
The weak activity and spending data published yesterday add to evidence that growth in China is starting to slow. We think the deceleration in the economy will be gradual and expect official efforts to contain credit risks to continue in the months ahead. …
16th May 2017
The activity and spending data for April all came in below consensus, continuing the recent trend of disappointing Chinese data. Softer foreign demand and domestic consumption were the immediate culprits, with infrastructure and property activity actually …
15th May 2017
The trade deal announced between the US and China today won’t make any meaningful difference to the bilateral trade imbalance, which could still trigger a flare-up of tensions between the two sides in the future. For now though, the Trump administration …
12th May 2017
The headline credit data for April were stronger than anticipated, with lending holding up relatively well in response to policy tightening. That said, our adjusted measure of broad credit still points to a further slowdown in economic activity ahead. … …
Hong Kong’s economy expanded in Q1 at the fastest pace in five years in y/y terms, boosted by strong growth in exports and investment. But this is likely to be as good as it will get. While external demand should remain buoyant, the rapid growth in …
Consumer price inflation edged up last month but broad price pressures still appear fairly subdued. Meanwhile, the rapid rise in producer price inflation since late last year is now reversing, thanks in part to the recent declines in commodity prices. … …
10th May 2017
We think headline inflation will have risen in April and expect a further pick-up over the next few months. But price pressures should remain contained over the course of this year. Meanwhile, the sharp rebound in producer prices over the past year has …
8th May 2017
Chinese trade is still growing rapidly but shipments are beginning to slow, with cooling domestic demand weighing on imports. Meanwhile, capital outflows are edging up again despite the recent rise in headline FX reserves. … Trade & FX Reserves …
Growing evidence that China’s economy is slowing has triggered falls in domestic equity and global commodity markets this week but there has been no repeat of the broad global sell-off that accompanied worries about China in the recent past. This is a …
5th May 2017
The latest PMI readings support our view that growth in China peaked at the turn of the year and is now decelerating. … PMIs (Apr.) …
2nd May 2017
China’s equity markets saw the biggest fall since 2016 in April after policymakers ramped up their rhetoric on limiting financial risks. Meanwhile, the renminbi has remained stable against the US dollar in recent weeks, but we don’t expect this to last. … …
28th April 2017
After falling for years, construction growth in China has stabilised since the start of 2016, supported by a rise in home sales. Dire warnings of developers collapsing have not materialised. But it is too early to sound the all-clear. … Construction …
27th April 2017
Analysts are convinced that the renminbi can only go one way – down against the dollar. But a return to appreciation is looking increasingly plausible. … Renminbi may be approaching a turning …
26th April 2017
Our China Activity Proxy (CAP) suggests that growth softened slightly at the end of Q1. There are good reasons to think that this foreshadows a broader slowdown in the economy in coming quarters. … Early signs that growth is edging …
24th April 2017
According to our latest detailed estimates, China’s net capital outflows have been close to zero during the past two months. This is a major shift from late last year when monthly outflows exceeded $70bn, and it has allowed the PBOC to start rolling back …
21st April 2017
Household borrowing has soared over recent months, largely in the form of mortgages. But this boom is probably nearing an end. Restrictions on property purchases have been reintroduced in many cities as economic jitters have faded and concerns about price …
20th April 2017
Nominal investment growth accelerated in Q1, leading to increased optimism over this year’s economic outlook. But adjusting the data for the jump in fixed asset price inflation suggests that underlying investment demand may actually have weakened last …
18th April 2017
Growth edged up last quarter according to the official GDP figures. Our own measure of economic activity also points to a strong start to 2017, though we don’t expect the strength to be sustained. … GDP (Q1) & Activity & Spending …
17th April 2017
The latest trade data point to buoyant external demand but suggest that domestic demand may have started to cool. … Trade (Mar.) …
13th April 2017
Hong Kong’s economy has rebounded over the past year and is likely to stay strong in the near-term, supported by rapid export growth, and we have raised our forecast for 2017. But we expect a fresh property downturn and weaker economic growth in mainland …
12th April 2017
Consumer price inflation remained tepid last month, suggesting that there was more to the drop in February than just seasonal factors. Producer price inflation remains rapid but has begun to come off the boil. … Consumer & Producer Prices …
China’s foreign exchange reserves were broadly stable last month, suggesting that the recent easing of capital outflows has allowed the People’s Bank to step back from FX intervention. … FX reserves …
7th April 2017
We expect Donald Trump to tone down his criticism of China’s mercantilist policies when he meets Xi Jinping later today in order to focus on dealing with the more pressing threat from North Korea. If we are right, the spectre of a near-term US-China trade …
6th April 2017
Consumer price inflation ought to have rebounded from a seasonal decline in February last month but remained low. Looking ahead, households will continue to face relatively subdued price pressures in coming quarters and the recent rise in factory gate …
5th April 2017
China’s government recently launched a new economic zone near Beijing that it is billing as the most important project of its kind since the Shenzhen Special Economic Zone and Shanghai’s Pudong New Area were established over two decades ago. The new zone …
4th April 2017
China’s interbank repo rates have fallen back slightly after the headline-grabbing spike last week that took them to their highest in more than two years. But the bigger picture is that the PBOC has been tightening monetary conditions gradually since last …
31st March 2017
Today’s PMI readings suggest that China’s economy continued to perform well in March, though we doubt the current strength will be sustained for much longer. … Official PMIs …
President Xi Jinping is heading to the US next week presenting himself – in contrast to President Trump – as a champion of free trade. Foreign firms operating in China tell a different story. In this China Watch we take a closer look at China’s free trade …
30th March 2017
Evidence of a sharp turnaround in growth and policymakers’ success in preventing a destabilising slide in the renminbi have underpinned a dramatic shift in sentiment towards China. But there are good reasons to expect growth to slow again soon and for the …
28th March 2017
The latest People’s Bank surveys show that conditions for banks, firms and households have all continued to improve this quarter. But while the general picture was positive, there were also some dark spots. Firms’ profitability and orders have weakened in …
22nd March 2017
We’ve revised up our 2017 growth forecast for China following the recent run of strong data. At the same time though, the latest figures on our China Activity Proxy (CAP) suggest that the acceleration that has been underway since this time last year has …
There is little doubt that Carrie Lam, the former head of Hong Kong’s civil service and the candidate preferred by Beijing, will be chosen on Sunday as the city’s next chief executive. But she won’t have popular support and will inherit an economy facing …
According to our latest detailed estimates, China witnessed a net inflow of capital last month for the first time in almost three years. Tighter capital controls and seasonal factors helped drive this reversal. But more important may have been an easing …
17th March 2017
People’s Bank Governor Zhou Xiaochuan made clear at the National People’s Congress that the trend would be towards further monetary tightening over coming months. So today’s decision by the PBOC to raise the interest rates it charges on reverse repos was …
16th March 2017
The People’s Bank has followed the Fed in raising the interest rate it charges when providing funds in China’s interbank market. But we believe that tighter policy in China continues to be primarily driven by efforts to tackle domestic credit risks, not …
Premier Li Keqiang’s remarks to the press today following the conclusion of the National People’s Congress reinforce our view that policymakers will allow a renewed slowdown in economic growth this year but won’t shift course on exchange rate policy. They …
15th March 2017
The latest reports and official comments from the National People’s Congress suggest that progress on reducing overcapacity and state sector reforms will remain sluggish this year. Unless policymakers act more decisively soon, we expect economic growth in …
14th March 2017
A jump in infrastructure spending and strong property sales have helped sustain China’s recovery into early 2017. Both these tailwinds look likely to run out of steam in the coming quarters, however, as policy support is pared back and a correction in …
In his annual outing before the press at the National People’s Congress today, People’s Bank Governor Zhou Xiaochuan made a strong case that policy support for the renminbi can be sustained in the face of market pressure. In fact, he argued that sales of …
10th March 2017
Bank lending in China held up better than expected last month but at the expense of other forms of credit, which have become less attractive following the recent rise in market interest rates. … Bank Lending & Broad Credit …
9th March 2017
Producer prices rose at their fastest pace since 2008 last month. But consumer price inflation remains well below the government’s 3% threshold. … Consumer & Producer Prices …
