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The PMI readings for May were underwhelming. Although they suggest that activity held up reasonably well last month, they also offer few signs of improvement. … PMIs …
1st June 2016
A decision to include mainland Chinese shares in MSCI’s global equity indices would cause ripples rather than waves in Shanghai and Shenzhen. … What difference would MSCI inclusion …
31st May 2016
The April data were disappointing after earlier signs pointed to strength in the first quarter of the year. Our China Activity Proxy suggests that growth has remained stable rather than accelerated recently. … April data dampen hopes for strong …
26th May 2016
In trade-weighted terms, the renminbi has regained some lost ground recently. But all the headlinesare about it falling to multi-year lows against the dollar. This underlines the difficult position the PBOCis in trying to limit talk of devaluation in an …
25th May 2016
China’s government has the resources to clean up the bad debts in its financial system. Even if the corporate sector were to default on a quarter of its debt and the government responded by bailing out the banks, total government debt would remain below …
19th May 2016
China’s April data have been met with downbeat headlines. This is not surprising given that growth in almost all the key economic indicators slowed last month. But the comparison between April and March is misleading since the earlier timing of …
18th May 2016
Foreigners continued to pull money out of China last month. But a further slowdown in the pace of external debt deleveraging helped to keep capital outflows manageable. … Capital Flows Monitor …
17th May 2016
Investment and retail sales softened last month but industrial output still looks healthy relative to Q1 and the property sector remains buoyant. With credit growth still accelerating we think the cyclical upturn in China's economy has further to run. … …
16th May 2016
Hong Kong’s economy contracted in Q1, with output dragged down by falls in exports and household spending. We don’t expect a major rebound in the quarters ahead as interest rates rise further and the city’s property downturn continues. … Hong Kong GDP …
13th May 2016
Many have rushed to interpret today’s below-consensus lending and credit data as signalling that a shift in policymakers’ focus back to controlling credit risks is already having an impact. While that is likely to be the case before too long, the latest …
The recent rally in commodity prices pushed up factory gate prices and household energy costs last month. But broader price pressures remained relatively stable. … Consumer & Producer Prices …
10th May 2016
Trade growth was always likely to slow sharply in April after the seasonal surge in March. More positively, the contraction in both exports and imports wasn't as deep last month as it has been over most of the past year. As such, the data is still …
9th May 2016
Consumer price inflation is likely to have risen in April to the highest since 2013 on the back of a further increase in pork prices. This may trigger concerns about a re-run of the pork-powered surges in inflation that caused macro worries in 2007 and …
5th May 2016
Weaker-than-expected PMI readings for April don’t alter our relatively upbeat view on the short-run prospects for China’s economy. … PMIs …
3rd May 2016
Worries about a rise in defaults pushed corporate bond spreads up sharply in April. Meanwhile, the rally in China’s equity markets came to a halt. … Corporate bond spreads …
29th April 2016
A recovery in China’s property market appears to be giving a lift to economic growth. This should continue for a few quarters. But the turnaround does not signal that the drawn-out correction in China’s property market has run its course. We expect the …
28th April 2016
Stimulus that is already in the pipeline should sustain China’s economic recovery to near the end of the year. But policymakers are more aware than in the past of the damage that excessive stimulus can do and are likely to pull back so that growth …
27th April 2016
There was a broad-based turnaround in China’s economy last quarter. Worries about structural imbalances continue to cast a shadow over medium-term prospects but the outlook for the rest of this year is much brighter than many recently thought possible. … …
Pork price inflation in China surged in March, bringing echoes of 2007 and 2011, when spikes in pork prices caused headline consumer price inflation to jump above 6%. However, we think the upward pressure on inflation caused by the rise in pork prices is …
26th April 2016
Capital outflows eased further last month on the back of fading concerns over the outlook for the renminbi and the recent tightening of controls on cross-border flows. … Capital Flows …
21st April 2016
The renminbi’s continued trade-weighted decline is probably best seen as an opportunistic response by Chinese policymakers to a period of broad dollar weakness rather than reflecting a policy to steadily devalue the currency. If that is right, and if the …
19th April 2016
A cyclical rebound appears to be underway. Admittedly, there is no sign of a turnaround in either the official GDP figures or Q1 industrial production. But evidence elsewhere points to a policy-driven pick-up, supported in particular by property and …
The cyclical recovery we had forecast for the start of 2016 appears to be underway. The turnaround has been built on the back of stronger activity in construction and real estate, supported by policy loosening. There are echoes of the 2009 recovery but, …
18th April 2016
While GDP growth edged down in Q1, there are at least signs in the more recent data that momentum was improving going into this quarter. With monetary and fiscal conditions still being loosened and credit growth accelerating we think this may signal the …
15th April 2016
China’s trade data for March point to healthy growth in import volumes and add to growing evidence that the extreme gloom of a few weeks ago about the state of the domestic economy was misplaced. … Trade …
13th April 2016
Inflation remained elevated by recent standards last month. But this is arguably welcome given previous concerns over deflation risks. It also shouldn't prevent further monetary easing given that there are few signs yet that inflation is about to get out …
11th April 2016
Receding fears over a sharp renminbi devaluation, along with favourable exchange rate movements, has helped end the recent string of declines in the value of China’s FX reserves. … FX Reserves …
7th April 2016
After a seasonal spike in February, CPI inflation is likely to have to have fallen slightly last month. That said, inflation is likely to remain higher in the coming quarters than during most of the past year. … Inflation outlook appears …
6th April 2016
Today's better-than-expected PMI readings are consistent with our long-held view that policy easing will result in a cyclical upturn in China’s economy this year. … PMIs …
1st April 2016
China is targeting average annual growth of at least 6.5% over the coming five years. Such rapid growth, which would place China in the top 10% of what has been achieved historically by other countries at its income level, is unlikely to be achieved. …
31st March 2016
Stock markets in China rose in March, helped in part by a pick-up in margin lending. Meanwhile, there are signs that speculative downward pressures on the renminbi have eased. Market interest rates remain near record lows. … Rebound in margin lending …
Our China Activity Proxy (CAP) suggests that growth held up at the start of 2016, but did not rebound as we had hoped. Nonetheless, we still think that a looser policy stance means the data is more likely to get better than worse over the coming months. …
30th March 2016
Capital outflows eased markedly last month as the pace of outbound investment by Chinese firms and investors cooled and foreigners pulled money out of mainland securities and renminbi deposits at a slower pace. This is the first edition of a regular …
24th March 2016
Three months after the People’s Bank hinted that it would in future manage the renminbi relative to a currency basket rather than the dollar the jury is still out on what this means in practice. Contrary to many fears, the renminbi has not weakened …
17th March 2016
The National People’s Congress has ended today leaving us still feeling confident in our relatively upbeat view of the immediate outlook for the economy. But the leadership’s continued tentative approach to structural reform raises doubts about growth …
16th March 2016
A plunge in home sales in February is the latest sign that Hong Kong’s overheated property market is now in the midst of a correction. We expect the housing market downturn to weigh on economic growth in the city over the next few years, with the drag …
15th March 2016
China’s latest activity data are more upbeat than first meets the eye and, on balance, suggest that economic momentum improved slightly in early 2016. We expect clearer signs of a recovery over the coming months. … A stronger start to …
14th March 2016
China’s credit data show some extreme swings in the past two months which are the result of seasonal factors. But the underlying picture is that credit growth continues to accelerate, consistent with our view that China’s economy could surprise on the …
11th March 2016
The jump in food inflation last month was seasonal and will prove short-lived. Price pressures elsewhere are likely to pick up in coming quarters but should stop short of becoming a constraint on further policy easing. … Consumer & Producer Prices …
10th March 2016
The contraction in China’s exports deepened last month but this weakness should soon reverse as seasonal distortions fade. Meanwhile, relatively strong commodity import volumes ought to help assuage concerns over weak domestic demand. … Trade …
8th March 2016
Official statements at the National People’s Congress have signalled, as expected, that the immediate economic priority is to support growth including with a looser fiscal stance and more monetary support. This should help drive a cyclical recovery, even …
7th March 2016
The smallest fall in the value of China’s foreign exchange reserves in four months suggests that capital outflows have eased, allowing the People’s Bank (PBOC) to slow the pace of its intervention. … FX reserves …
A spike in food prices due to Chinese New Year looks likely to have caused inflation to pick up further in February. Once seasonal volatility has faded, we expect inflation to rise further this year but still to remain below the government’s inflation …
4th March 2016
China’s annual National People’s Congress starts on Saturday. Among the headline announcements are likely to be GDP growth targets for this year and beyond that are unrealistically high and will do nothing for policymaking credibility. More positively, …
2nd March 2016
Today's PMIs suggest the economy lost some momentum last month but monetary policy easing by the People's Bank helps to limit the downside risks going forward. … PMIs …
1st March 2016
Stock markets in China slumped at the end of February, erasing nearly all of the gains they had made since the late-January low. Meanwhile, market interest rates have remained near record lows. The PBOC’s decision today to cut the required reserve ratio …
29th February 2016
All of the increase in capital outflows from China last year was the result of a reduction in China’s foreign liabilities, largely driven by firms paying down external debt. By contrast, purchases of foreign assets by Chinese firms and households actually …
The People’s Bank paused monetary loosening in recent weeks apparently on concerns that it would worsen capital outflows. The government stepped up fiscal support instead. Today’s cut to the required reserve ratio (RRR) is therefore both confirmation that …
Today’s GDP data confirmed that growth in Hong Kong stayed weak at the end of 2015. Although the government has unveiled a budget that should support growth this year, we don’t think it will be enough to offset the impact of a further slowdown in …
24th February 2016
The number of Chinese tourists travelling abroad continues to rise rapidly. The main destination countries recorded an average increase in visitor arrivals from China of nearly a third last year. Outbound travel over the recent Chinese New Year period …
22nd February 2016
