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Broad credit is still expanding at a faster pace than during most of the past couple ofyears. But the impact of earlier monetary easing is now waning and after peaking in May, credit growth is starting to cool. … Bank Lending & Broad Credit …
12th August 2016
Despite the slight decline in industrial value-added growth, underlying data on output volumes suggest activity in key parts of industry continued to strengthen last month. That said, a further sharp slowdown in investment growth means that unless the …
Less rapid increases in food prices dragged down consumer price inflation last month, masking a continued pick-up in broader price pressures. Inflation is likely to edge up in the coming months, though not to a level high enough to become a major concern …
9th August 2016
Today’s trade data disappointed, with stronger manufacturing activity among many of China’s key trading partners failing to lift export growth and import growth falling on the back of the renewed drop in global commodity prices. More positively though, …
8th August 2016
Consumer price inflation is likely to have fallen in July, dragged down by a sharp drop in pork price inflation. But we expect inflation to edge up again in the coming months as severe flooding across large parts of China causes food prices to rise. … …
5th August 2016
Concerns about growing credit risks mean that the People’s Bank has good reason to hold off from another round of broad easing measures until clear signs of a renewed downturn emerge. … PBOC probably won’t cut rates or the RRR anytime …
4th August 2016
The global market panic following the step down in the renminbi fixing rate a year ago turned out to be overdone. The currency has since weakened further, but the large scale competitive devaluation that many feared has not materialised. Even so, the …
3rd August 2016
Today’s better-than-expected PMI data are consistent with our view that we should see a policy-driven pick-up in growth during the second half of this year. … PMIs …
1st August 2016
Stock markets in China have had a volatile end to the month. Meanwhile, the PBOC appears to have stepped up its foreign currency interventions in order to prevent the renminbi from weakening further. Market interest rates remain near record lows. … PBOC …
29th July 2016
The Capital Economics China Activity Proxy signals that economic growth was stable in Q2 but it does appear to been accelerating at the end of the quarter, which supports the view that a pick-up is on the cards in the second half of the year. … Stronger …
25th July 2016
Global investors pulled money out of China’s financial markets at a slightly faster pace last month, perhaps due to renewed concerns about the outlook for the renminbi. But the largest rise in foreign firms’ direct investment this year helped to keep …
22nd July 2016
Recent data from China’s labour market corroborate evidence elsewhere that the economy has slowed since the start of 2015 but that it has avoided the collapse that many had feared. Migrant wage growth continues to decelerate but remained relatively high …
20th July 2016
China’s GDP data are widely maligned. But one area where the figures are useful is in the detail they provide on the service sector. Figures for Q2 suggests that, finance apart, most sections of the service sector are in good shape. … Service sector …
18th July 2016
Credit is still expanding at a fast enough pace to provide support to the economy over the next couple of quarters. However, today's figures provided signs that the boost to credit growth from policy easing is starting to fizzle out. … Bank Lending & …
15th July 2016
While China is almost certainly expanding at a slower rate than its GDP data suggest, rapid state sector investment does appear to have kept growth broadly stable last quarter. Growth is more likely to pick up over coming months than slow further, but a …
China’s trade data for June point to further tepid growth in global demand and steady growth in imports in volume terms, helped by continued healthy growth in demand for commodities. … Trade (Jun …
13th July 2016
Consumer price inflation declined slightly last month, owing to a drop in food inflation. Looking ahead, while we expect inflation in coming months to be close to the rates seen so far this year, flooding in large parts of China has added upside risks. …
11th July 2016
Consumer price inflation is likely to have fallen in June on the back of a further decline in food price inflation. Looking ahead, while we expect inflation in the second half of 2016 to be broadly the same as in the first two quarters, ongoing flooding …
7th July 2016
The surprise increase in the value of China’s foreign exchange reserves last month could be the result of the People’s Bank marking to market the value of some reserve assets at the end of June, in the midst of the post-Brexit vote financial volatility. …
Continued declines in the renminbi against both the dollar and the official trade-weighted basket make a mockery of the PBOC’s suggestion that its policy is to keep the currency’s value stable. Another upsurge of speculative pressure on the currency is …
6th July 2016
The Q2 GDP data will provide a welcome glimpse into the performance of parts of the service sector where the regular monthly flow of data provides less visibility. But the figures should be handled with care since political pressure to meet official …
5th July 2016
Our new measure of activity in China’s industrial sector, based on data on the output of hundreds of products, points to much slower growth than the closely-watched monthly industrial production data show. Concerns over massaged growth figures aren’t …
4th July 2016
The manufacturing PMIs continue to disappoint. But given the recent resilience of the service sector and signs of strength in construction, we still aren’t overly concerned about the near-term outlook for China’s economy. … PMIs …
1st July 2016
The renminbi has weakened against the US dollar following the UK’s decision last week to leave the EU. But there are no signs of renewed panic about the currency.Meanwhile, equity markets have held steady and interest rates remain low. … China’s markets …
30th June 2016
A year after tumbling equity prices in China triggered fears about a collapse in the economy, the crisis many feared has not materialised. While more jitters are possible, a slump in growth over the months ahead remains unlikely. But slow progress in …
28th June 2016
The Capital Economics China Activity Proxy points to a pick-up in growth in May, but not the strong turnaround that policy support might have been expected to deliver by now. While growth should still strengthen over the rest of the year, the acceleration …
27th June 2016
The latest surveys of banks, companies and households in China released today suggest that business conditions and consumer confidence both improved this quarter. However, demand for loans remained weak. … The view from the ground – Q2 …
24th June 2016
The direct economic implications for China from the UK’s decision to leave the EU are small. A greater concern is that the renminbi could come under pressure to weaken against a resurgent dollar in the next few days, which could revive depreciation fears. …
Capital flows out of China have stabilised in recent months and policymakers have responded by once again easing restrictions on cross-border flows. But outflows are likely to pick up again if the dollar strengthens in the months ahead. … Capital Flows …
21st June 2016
A vote by the UK to leave the EU on Thursday is unlikely to have much impact on China. The economic and financial linkages between the UK and China are small, at least as far as China is concerned. In particular, exports to the UK are equivalent to just …
17th June 2016
Private consumption growth in Hong Kong is at the weakest since 2009, even though the labour market is tight and real wages are growing strongly. The downturn in the city’s housing market and a slump in stock prices are largely to blame. … Wealth effect …
15th June 2016
After accelerating since mid-2015, credit growth now appears to be stabilising. It may start to slow before long given that policymakers have in recent months refrained from further monetary easing. … Bank Lending & Broad Credit …
Industrial activity remained stable last month but a further slowdown in private sector investment raises concerns about the medium term outlook. … Activity & Spending …
13th June 2016
Credit growth has been accelerating since the middle of last year and yet growth has remained sluggish, raising questions over the effectiveness of recent policy stimulus. … Why has stronger credit not lifted …
9th June 2016
Consumer price inflation edged down last month but remains at a healthy level. Meanwhile, producer prices continue to recover faster than anticipated on the back of rebounding commodity prices, easing lingering concerns over deflation. … Consumer & …
China’s exports remain weak on the back of subdued external demand. But at the same time, recovering commodity prices and relatively resilient domestic demand are driving a recovery in import growth. … Trade …
8th June 2016
For China’s policymakers worrying about overcapacity, misplaced credit and pressures on the currency, the benign inflation outlook is a rare bright spot. We think consumer price inflation in China was close to 2% in May, down slightly from April, and …
6th June 2016
The latest survey on migrant workers, who are often the first to suffer when economic and labour market conditions deteriorate, confirms evidence elsewhere of weakness in key parts of the economy. And although the gains from rural to urban migration won’t …
3rd June 2016
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
