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Today's PMI reading is the latest sign that downwards pressure on the manufacturing sector has eased as a result of the government's targeted measures, which have helped to support domestic demand. … HSBC/Markit Flash Manufacturing PMI …
23rd June 2014
Our China Activity Proxy (CAP) suggests that economic growth stabilised in Q2 and on this basis we expect official GDP growth to come in close to Q1’s 7.4% y/y. The weakness in real estate is deepening, but this is being offset by strength in other areas, …
20th June 2014
The People’s Bank (PBOC) further reduced its foreign exchange purchases to around $6bn in May, the lowest in almost a year. Given last month’s large trade surplus, this might suggest that capital inflows have finally reversed. A closer look reveals that …
18th June 2014
Tracking the stance of the People’s Bank has become more difficult as it has brought a large number of policy tools into play. But the consistent goal appears to be to stabilise credit growth. … What is the PBOC up …
16th June 2014
Today's output and spending data from China suggest that policymakers are being reasonably successful so far at fine-tuning policy in order to stabilise growth. We suspect that downward pressures from the property sector may intensify but, for now, there …
13th June 2014
Policymakers’ efforts to channel bank lending to chosen parts of the economy are helping to support loan growth, even as controls on shadow banking continue to bite. Although this has helped to stabilise credit growth, policymakers are likely to stop …
12th June 2014
Today's inflation data confirm our view that broader price pressures are stable and that concerns about deflation, sparked by a short-lived fall in headline inflation in April, were overplayed. … Consumer & Producer Prices …
10th June 2014
Details just published on the People’s Bank website about the targeted required reserve ratio cut that was first announced in late May underline how reluctant policymakers remain to pursue across-the-board easing in China. … Partial RRR cut illustrates …
9th June 2014
The unexpected contraction in imports last month probably overstates the weakness in domestic demand. While we believe that the cooling property sector is indeed weighing on commodity demand, May's weak headline import figure also reflects the ongoing …
In the past few weeks, policymakers have adopted an approach to supporting the economy that is the opposite of that followed in 2008. Then, banks were encouraged to flood the economy with credit. Now, policymakers are carefully metering the support they …
With both consumer and producer price inflation likely to have risen in May, there are few convincing signs that China is sliding into deflation. This should ease calls for the People’s Bank to roll out more aggressive monetary easing. … Inflation …
5th June 2014
The ongoing slowdown in the property sector is hitting land sales, which some have suggested has worrying implications for local government finances. We think the risks are being exaggerated and that land sales, and indeed the property sector as a whole, …
The People’s Bank has succeeded over the past few weeks in shifting expectations for the renminbi’s future path while also scaling back its foreign exchange accumulation. At first glance the data suggest that capital inflows have stalled. But a closer …
2nd June 2014
A third successive pick-up in the official PMI provides further evidence that conditions in manufacturing are improving, thanks to warming foreign demand and a rebound in infrastructure investment. With further measures to support small firms announced …
The renminbi appears to have stabilised in May as market participants have pared back expectations for the currency’s appreciation. Meanwhile, weaker demand for interbank funds, along with liquidity injections by the central bank, have kept market …
30th May 2014
Allowing local governments to issue bonds is a key step towards boosting transparency and encouraging stronger oversight over fiscal spending. But a broader rebalancing of the revenues and spending commitments of central and local governments is needed to …
22nd May 2014
Today's PMI reading suggests that downwards pressure on the manufacturing sector has eased markedly. It provides further evidence that stronger external demand, along with the rebound in infrastructure investment, is helping to moderate the pace of …
Rising non-performing loans (NPLs) at Chinese banks have been making headlines recently. So far the increase has not been much to get excited about. Official data suggest the NPL ratio has barely moved from a very low 1% and even if the true figure is, as …
21st May 2014
Our China Activity Proxy (CAP) suggests that, although heavy industry and real estate are showing signs of weakness, broader economic activity is holding up relatively well. … Property downturn yet to lead to broader …
Hong Kong’s economy slowed sharply in Q1, due to a slump in exports. However, the slowdown is likely to prove temporary, and we expect growth to rebound over the coming quarters as the global economic recovery gathers momentum. … Hong Kong GDP (Q1 …
16th May 2014
China’s economic growth is more likely to slow over the next couple of years than to accelerate, with the property sector in particular appearing on the cusp of a correction. But policymakers have tools at hand to support growth and prevent a slowdown …
13th May 2014
In the face of calls for stimulus, China’s government appears comfortable with a continued slowdown in credit growth. … Bank Lending & Broad Credit …
12th May 2014
Worries about deflation following the release of today’s price data from China are overdone. Last month's drop in consumer price inflation was due to a sharp fall of vegetable price inflation, which is likely to be short-lived. Producer price inflation …
9th May 2014
Today's trade data are more upbeat about the state of foreign demand than the recovery in the headline numbers suggests. If we strip out exports to Hong Kong and Taiwan, which were most affected by over-invoicing a year ago, then exports from China are …
8th May 2014
Headline inflation is likely to have dropped in April but is set to rebound this month, due to swings in food inflation. That said, the broader picture is that price pressures remain low and stable, and that inflation is unlikely to become a major concern …
6th May 2014
In recent months, Chinese policymakers have stressed repeatedly that employment growth, rather than rapid GDP growth, is their number one priority. This has led to speculation about how fast the economy needs to grow to ensure the employment target is …
2nd May 2014
Today’s second successive pick-up in the official PMI is another piece of evidence that economic conditions have stabilised somewhat recently. This should ease concerns of an imminent hard landing, though economic growth is still likely to weaken further …
1st May 2014
After large-scale intervention succeeded in weakening the renminbi and rattling many investors, there are tentative signs that the People’s Bank is now trying to introduce some stability. … Further RMB weakening tests the PBOC’s …
30th April 2014
Our China Activity Proxy (CAP) suggests that growth stabilised during the course of the first quarter. Nonetheless, we expect weakness in real estate construction to cause the economy to slow again over the coming quarters. … Downward pressures …
29th April 2014
Outbound tourism is becoming an important factor in China’s international payments balance, contributing to a deficit in services trade that is partially offsetting the goods trade surplus. … China’s tourism deficit offsetting surplus in goods …
25th April 2014
The outlook for China’s property sector is increasingly gloomy. The usual rebound in sales after Chinese New Year has been feeble, and the glut of unsold properties on developers’ books continues to grow. New projects starts plunged in Q1, which may …
24th April 2014
Today's PMI reading suggests that while conditions in the manufacturing sector continue to weaken, they are no longer deteriorating as rapidly as before. It adds to growing evidence that, with infrastructure investment picking up, the recent slowdown in …
23rd April 2014
Yesterday’s targeted cut in the reserve requirement ratio should not be read as a signal of a broader shift towards monetary loosening. The last thing that policymakers want to see is another credit fuelled rebound like in 2012, which would only serve to …
17th April 2014
The marginally stronger-than-consensus Q1 GDP data and broad stability in March growth figures suggest that concerns over the state of China’s economy are overdone. The economy is likely to weaken further on the back of slowing credit and property …
16th April 2014
A hard landing in China’s economy is one of the biggest risks clouding the outlook for the rest of Emerging Asia. A slump in Chinese demand would hurt economies with close trade links to China, with commodity exporters likely to be especially hard-hit. A …
15th April 2014
Despite a surge in bank loans and relatively loose interbank liquidity conditions in March, today's data show that the credit slowdown is still on track. Meanwhile, although the foreign exchange reserve figures hint at some success in deterring …
The introduction of a new scheme allowing global investors to access Shanghai’s equity market is China’s latest step to relax controls on its cross-border capital flows. The announcement gave a brief boost to Chinese equity prices, but the longer-term and …
11th April 2014
Despite a seasonal pick-up in food inflation, today's data provide further evidence that general price pressures remain subdued. … Consumer & Producer Prices …
Today's trade data should be interpreted with care, as sharp contractions in trade with Hong Kong and Taiwan appear to be distorting the broader picture. Exports to other regions actually grew 7.8% y/y last month and the outlook remains healthy. … Trade …
10th April 2014
Seasonal volatility in food inflation continues to cause swings in consumer price inflation. However, with broader price pressures subdued and little sign of major policy loosening on the horizon, the government’s annual inflation target is unlikely to …
8th April 2014
Policymakers everywhere have to be seen to respond to economic concerns. But the measures unveiled in Beijing last night are simply reheated versions of previous announcements that shouldn’t change the outlook for growth. This suggests that officials are …
3rd April 2014
A growing number of economists are challenging the view that China invests too much and consumes too little by arguing that the official data grossly understate consumption and overstate investment. There is a degree of truth to these claims. But the …
2nd April 2014
Reports today of another small bond default in China are a sign of the growing maturity of the country’s bond market. Still, while investors are now paying more attention to credit risks, it is not yet clear whether this is leading to better allocation of …
1st April 2014
Taken at face value, today's PMIs appear to offer conflicting messages. In practice however, their divergence provides useful clues into the state of the manufacturing sector, suggesting that large firms have held up better than many feared but that …
The renminbi weakened against the dollar in March for a second month in a row but it is still one of the emerging world’s better performing currencies over the past year. Meanwhile, a renewed tightening of liquidity is putting more pressure on less credit …
31st March 2014
With the People's Bank pushing interbank rates higher and senior figures ruling out significant fiscal and monetary loosening, market hopes of a stimulus package for China are likely to be disappointed. Instead, the government seems confident that some …
By omitting rapidly-growing online sales, China’s retail sales data may be exaggerating how much spending has slowed in recent years. … Online spending giving hidden boost to retail …
27th March 2014
Today's weak PMI reading is the latest sign that slowing credit and investment growth are weighing on domestic demand. That said, with no sign of stress in the labour market, the slowdown does not yet appear to warrant a significant stimulus response. …
24th March 2014
Businesses in China are not too worried at present about the state of the wider economy, but they are extremely concerned about the conditions facing their own firms. By contrast, Chinese households appear still to be in relatively good spirits. … The …
21st March 2014
Our China Activity Proxy (CAP) suggests that renewed fears of a hard landing are overdone and that, although the economy has slowed going into this year, the rate of slowdown does not warrant a significant stimulus response. … China’s growth slowing to …
