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This page has been updated with additional analysis since first publication . Recovery hits a speed bump Industrial production continued to accelerate thanks to strong exports, but growth on most other indicators slowed, pointing to softer domestic …
17th May 2024
Government purchases of unsold housing may help to stabilise China’s property sector in the near-term, alleviating a key economic headwind. But they won’t prevent the sector from shrinking considerably further by the end of this decade. At its quarterly …
16th May 2024
Overseas loans by Chinese banks peaked in late 2021 and have since been curtailed in response to increased debt problems among EM borrowers. While these strains are partly a consequence of global shocks, they have also underscored some flaws with China’s …
This note answers some of the most frequently asked questions that we received from clients during a recent online briefing about the latest US tariffs on China. Watch the original briefing here . What has been announced? Yesterday was the end of a …
15th May 2024
This interactive dashboard allows you to explore all of our forecasts and key data for China's economy. We also have a standalone China Activity Proxy dashboard here . If you have subscriber access to the data underlying this redesigned dashboard, you …
The tariffs announced today on US imports from China won’t cause much direct economic damage since trade in the affected goods is already low. But US economic sanctions on China seem to act like a ratchet: they only ever get tighter. In many areas that …
14th May 2024
Rebound in inflation set to be limited due to overcapacity PPI deflation eased and CPI inflation rose in March, but they remained relatively subdued compared with pre-pandemic norms. We think inflation will continue to edge up in the near term. But …
13th May 2024
Credit downturn threatens the recovery Broad credit growth slowed sharply to its weakest pace on record last month. This threatens to derail the ongoing economic recovery and is likely to trigger additional policy easing. Increased fiscal support may help …
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
This page has been updated with additional analysis since first publication . Export volumes have further to fall Export values returned to growth last month after contracting in March, but this was mainly due to a lower base for comparison. Export …
9th May 2024
China’s leadership argues that the country’s export success in industries like auto production is a reflection of its technological strength. It understandably doesn’t want to focus on another factor at play: the persistent weakness of domestic consumer …
8th May 2024
The sharp rise in the price of carbon under China’s Emission Trading Scheme (ETS) this year, to a record high, underlines that Beijing sees carbon pricing as a key part of its emissions-reduction toolkit. Although the price of polluting in China is likely …
7th 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
Strong Q1 growth masks lacklustre domestic recovery Hong Kong’s GDP surprised to the upside in Q1, expanding by 2.3% q/q, up from a downwardly-revised 0.4% q/q in Q4 (the Bloomberg median was +0.9 and out forecast was +0.8%). While growth slowed in y/y …
2nd May 2024
Chinese policymakers won’t risk reliving the turmoil of 2015 by engineering a sudden devaluation of the renminbi . They may allow the currency to weaken gradually over the coming years to help industry deal with oversupply or to offset the impact of new …
1st May 2024
China Chart Pack (Apr. 24) …
30th April 2024
Most analysts expect China’s inflation rate to rebound to around 2% by 2026. In contrast, we think that persistent imbalances between supply and demand will keep it close to zero for the foreseeable future. This will make it harder to manage China’s high …
Leadership promises continued policy support, new round of reforms The readout of the Politburo’s quarterly meeting on economic affairs has just been published by state media. The tone remained dovish, suggesting that policy will remain supportive in the …
This report was first published on Tuesday 30 th April covering the official PMIs and the Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on Monday 6 th May. A touch softer but recovery still intact, for now The …
All the signs suggest that a second Trump administration would take a more protectionist approach to trade. Export demand in Mexico, East Asia and ASEAN would be particularly hard hit by a universal US import tariff or a dollar devaluation, and those …
29th April 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
Our China Activity Proxy (CAP) suggests the economy saw a healthy expansion in March, driven by the continued strength of industry. While we think that fiscal support will keep fuelling the economy in the near-term, structural headwinds will start to drag …
24th April 2024
While EM policymakers haven’t raised concerns about Chinese overcapacity in the same way that their counterparts in the US and Europe have, they too are facing widening trade deficits with China. We suspect EMs will be less likely than DMs to turn to …
The rapid expansion in China’s manufacturing capacity of green technology is a symptom of the country’s investment-led growth model and so there is no reason to believe that any change in tack is imminent. Against this backdrop, western governments will …
23rd April 2024
A week spent visiting client s, contacts and friends in Beijing and Shanghai has underlined the extent of the pessimistic shift in sentiment within China. At first glance, China’s economy is doing fine . The streets of Beijing and Shanghai are bustling …
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
Fiscally-fuelled improvement unlikely to last long Stronger-than-expected official GDP figures indicate that China’s economy gained momentum in Q1, thanks to policy support. But monthly activity data suggest that this policy-driven recovery is shaky. …
16th 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
This page has been updated with additional analysis since first publication Credit growth plummets in a further sign of weak demand Bank loan and broad credit growth in China both decelerated sharply in March. (See Chart 1.)While we expect the PBOC to cut …
This page has been updated with additional analysis since first publication . Export volumes remain strong Despite a larger-than-expected y/y fall in export values, export volumes climbed to record highs. Nonetheless, we still think export volumes will …
This page has been updated with additional analysis since first publication . Overinvestment will keep inflation below pre-pandemic average CPI inflation rose less than expected in March but is still trending upwards. We think an easing of food price …
11th 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
China’s economy continued to recover in the first months of the new year. And we think fiscal support will keep supporting growth in the near-term. That said, the property sector remains a drag on the economy, and we expect a sharp downward adjustment in …
3rd April 2024
This report was first published on Monday 1 st April covering the official PMIs and the Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on Wednesday 3 rd April. More signs of a cyclical upturn Sizeable rises in the …
1st April 2024
CEO visits underscore China’s continued appeal President Xi held a rare, highly-publicised meeting in Beijing with a visiting US business delegation this week. The optimistic take is that, facing economic weakness and collapsing FDI, China’s leadership is …
28th March 2024
We continue to think that policymakers in China and Japan will do enough to keep their currencies from weakening much further, but the risk of a break lower in one, or both, is increasing. Push-back from the authorities in China and Japan has stabilised …
27th March 2024
Overview – China’s economy has fared better recently and policy support is likely to remain a near-term prop to growth. But we remain less sanguine about the medium-term outlook. Domestic Demand – State investment can make up for lacklustre consumption, …
Our China Activity Proxy (CAP) suggests that the economy has performed reasonably well over the last few months – better than much recent commentary would suggest. We expect activity growth to slow later this year as policy support fades. The CAP is our …
LGFVs stepping up land purchases Despite the collapse in home sales, construction activity has retreated only modestly in recent years. We think the bulk of the correction has yet to come , with construction activity likely to halve by the end of this …
22nd March 2024
We hosted an online briefing to discuss EM financial risks in more detail. Watch the recording here . Our risk indicators are presented as an interactive EM dashboard on our website here . The past few years have sharpened investors’ focus on assessing …
20th March 2024
This page has been updated with additional analysis since first publication . A decent start to 2024 despite a still fragile consumer China’s economy continued to show some improvement at the start of the year thanks to strength in exports and fiscal …
18th March 2024
Campaign will boost demand but also supply On Wednesday, the State Council published an action plan to promote the large-scale upgrading of equipment and trading-in of consumer goods. We already discussed the implications of the latter in our previous …
15th March 2024
This page has been updated with additional analysis since first publication . Rebound in credit growth blown off course Bank loan growth in China decelerated to its slowest pace on record in February, while broad credit growth reversed most of its recent …
“New Three” Chinese exports = must-watch data …
14th March 2024
Out of negative territory but set to remain low CPI inflation turned positive last month for the first time since September, thanks to temporary factors such as the volatility in food and tourism prices around Lunar New Year. But persistent overcapacity …
11th March 2024
New Productive Forces, old ideas At the top of the premier’s list of Major Tasks for 2024 in his Work Report is a call to develop “New Productive Forces at a faster pace”. NPF is taking a place alongside “common prosperity” in the lexicon of Xi Jinping …
8th March 2024
Export volumes hit record high China’s export values rose y/y at the fastest rate since May, with export volumes reaching a record high. We doubt the sustainability of this strength, however, since exporters now have more limited scope to reduce prices to …
7th March 2024
The drag from the unavoidable structural decline in China’s property sector has only just begun. Property sales and project starts have collapsed. But property construction activity has retreated only a little. It is likely to halve in the next few years, …
6th March 2024
The policy agenda laid out at the National People’s Congress today is a reasonably pro-growth one. The new fiscal plans are supportive, monetary policy continues to have an easing bias, and the Premier reiterated recent welcome messages about …
5th March 2024
Reading the NPC tea leaves China’s legislature will kick off its annual gathering on Tuesday. This typically lasts a week or so. But from the perspective of analysts and investors, the key events are on the first day. These include the delivery of the …
1st March 2024
