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The April reading of the Capital Economics China Activity Proxy (CAP) dampens hope of a quick turnaround in growth this quarter. Worries over avian flu may have played a small part in suppressing activity last month, but the weakness was broad-based. … …
22nd May 2013
Over-invoicing by exporters over the last five months has significantly inflated the apparent strength of overseas demand. While official customs data show a surge in exports, this is not evident in the imports reported by trading partners. China’s …
17th May 2013
Today’s data releases suggest that domestic demand remains weak despite a strong expansion in credit in recent months. … Still subdued in …
13th May 2013
Credit growth has continued to accelerate. This hasn’t had a positive impact on economic growth so far but we expect it to feed a small pick-up in activity in the months ahead. … Lending …
10th May 2013
GDP figures for Q1 released today show growth in Hong Kong remained lacklustre in y/y terms, while in q/q terms the pace of expansion slowed sharply. Looking ahead, with global demand set to disappoint over the next couple of years, growth in Hong Kong is …
The pick-up in headline consumer price inflation in April was driven by a rebound in vegetable prices, which should be short-lived. But headline inflation is still likely to edge higher over the coming months, as pork prices rise. … Consumer & Producer …
9th May 2013
The acceleration in both export and import growth last month was simply the result of there being more working days in April this year than last. It does not point to strengthening demand either at home or abroad. … Calendar effects inflate trade …
8th May 2013
Consumer price inflation probably picked up last month, due to a rebound in vegetable prices. Further increases lie ahead. … Inflation Monitor (Apr. …
7th May 2013
A wider trading band for the renminbi is a likely next step in currency policy reform. But it may not happen as soon as many think and, in any case, would probably make little difference to the renminbi’s path. In this month’s China Watch we take a …
2nd May 2013
Another downbeat data release, this time of China’s official PMI, adds to evidence that the economy remains weak after the slowdown in Q1. Indeed, the headline figure probably overstates current strength, by failing to account adequately for a seasonal …
1st May 2013
China’s equity prices have declined further amid renewed worries about the country’s economy. Meanwhile, the People’s Bank has tolerated recent gains in the renminbi. … Equities fall …
30th April 2013
China once again disappointed expectations with today’s release of a downbeat April flash PMI. Nonetheless, with the labour market still looking healthy, we think policymakers will remain focused on controlling credit rather than adding stimulus. … …
23rd April 2013
The Capital Economics China Activity Proxy (CAP) suggests that the economy remained weak throughout Q1. The fading of a “leap year effect” made little difference: last quarter’s slowdown was not simply, as some have suggested, a statistical glitch. … Weak …
Talk in China of new subsidies to boost household spending is an unwelcome sign that officials may have been diverted by the recent disappointing growth numbers towards thinking of short-term fixes rather than more far-reaching structural reform. … …
18th April 2013
The release of China’s weak Q1 GDP data jolted markets worldwide. Consensus forecasts for 2013 growth have been lowered. The prospect of significant policy tightening, including benchmark rate hikes, has faded. But perhaps the biggest impact has been on …
Today’s weak GDP data shocked consensus expectations. The most striking detail is the degree to which growth remains dependent on an overstretched property sector and on policy support. … Hopes for sustained recovery …
15th April 2013
The stronger-than-expected rise in bank lending in March will reinforce concerns that credit growth is on an unsustainable path. Meanwhile, the People’s Bank has resumed its accumulation of foreign exchange reserves in an effort to keep the renminbi from …
11th April 2013
China’s exports cooled last month, correcting the surprisingly strong growth seen earlier this year. By contrast, imports beat expectations, and the increase appears to have been driven by stronger domestic demand. That said, with the lingering concerns …
10th April 2013
The larger-than-expected fall in headline inflation in March simply reflects the usual seasonal patterns stemming from the Chinese New Year. Looking ahead, inflation is likely to pick up again soon on the back of a probable rise in pork price inflation. …
9th April 2013
China passed a milestone last year as its working age population fell for the first time in the modern era. Demographic change will have a profound impact on the long-run trajectory of China’s economy. But the impact over the next five years or so that is …
8th April 2013
Consumer price inflation should have dropped back last month as the seasonal distortion caused by Chinese New Year faded. Looking ahead though, recent falls in pig numbers signal that another pork-price-driven pick-up in inflation is likely. … …
5th April 2013
The latest tightening of rules on wealth management products will help manage risks building up in China’s shadow banking system. But the long-term route to reducing risk is careful liberalisation of China’s strictly-controlled banking system. … China …
28th March 2013
The People’s Bank of China (PBC) sat on the sidelines of foreign exchange markets in 2012 with net purchases close to zero for much of the year. But it has burst back into the game, buying $56bn of foreign exchange in January and, according to our …
China’s equity prices have dropped since late February, bringing to an end the rally that started in early December. Meanwhile, the People’s Bank has resumed large-scale foreign exchange purchases to slow appreciation of the renminbi. … Equity rally …
26th March 2013
Today’s flash PMI from HSBC and Markit points to a rebound in manufacturing activity in March. The latest figures were stronger than expected but with other recent releases disappointing and the usual Chinese New Year uncertainty clouding the picture, it …
21st March 2013
The Capital Economics China Activity Proxy suggests that economic growth is slowing in the current quarter, much sooner than most had expected. … CAP points to surprise slowdown in …
20th March 2013
Confidence is rising, but business leaders in China are less upbeat about conditions for their own firms than they are about the wider economy. This suggests that sentiment may be running ahead of reality. Meanwhile, households are as reluctant as ever to …
19th March 2013
Premier Li Keqiang has taken office with pledges to tackle inequality, boost urbanisation and deal with vested interests. These are all major economic concerns. But longstanding China watchers may feel that they have heard it all before. They will require …
18th March 2013
Economic reform appears to be getting off to a slow start under the new leadership but moves to reduce government oversight of investment and other business operations suggest that it is at least moving on the right track. … New leadership edging …
14th March 2013
The weekend’s data releases suggest that China’s economic rebound is faltering sooner than expected, even by relative pessimists such as ourselves. … Economic rebound may already be …
11th March 2013
China’s exports were far stronger than expected last month. By contrast, import growth remains slow. In particular, the recent acceleration in domestic activity has done little to boost commodity import demand. … Demand strong from overseas but appears …
8th March 2013
Inflation will have spiked higher last month because of price rises ahead of Chinese New Year, but it should drop back in March. Looking further ahead, inflation is likely to rise but we think the government’s target of 3.5% average inflation in 2013 is …
7th March 2013
The annual meeting of China’s parliament, the National People’s Congress, starts on Tuesday. Expectations, as usual, are low. This year though, with a new leadership keen to project an energetic image, it may be more eventful than in the recent past. With …
4th March 2013
Seasonal factors may have played a part, but the weakness of China’s two manufacturing PMIs last month cannot entirely be explained by the timing of Chinese New Year. They suggest that the economic rebound is losing steam. … Manufacturing PMIs (Feb. …
1st March 2013
A slowdown in property construction was the main reason that China’s economy slowed last year. Even so, the sector remains on an unsustainable path. It may be years before policymakers can sensibly start thinking of relaxing controls on property purchases …
28th February 2013
Hong Kong’s economy grew at its fastest pace in nearly two years in Q4, thanks mainly to a pick up in export growth. Prospects for the economy depend largely on the outlook for global demand. As such, a strong and sustained recovery in Hong Kong is more …
27th February 2013
Today’s worse-than-expected flash manufacturing PMI from HSBC and Markit dampens hopes of a continued economic acceleration. Even allowing for distortions around Chinese New Year, it appears that the rebound is faltering. … HSBC/Markit Flash …
25th February 2013
Global copper mine supply grew at its fastest rate in eight years in the closing months of 2012 and mine output is likely to grow just as quickly this year. This should enable smelters to raise their output, but it will also add to the stockpiles of …
21st February 2013
This is the first edition of a new publication for clients of our China service. The China Markets Monitor will provide a monthly summary of developments in financial markets in mainland China and Hong Kong along with key forecasts. The rally in China’s …
20th February 2013
Four years after China’s economy was rescued by a huge loan-fuelled stimulus, its economic growth continues to be shored up by an unsustainable dependence on credit. … Hooked on …
15th February 2013
China’s current account surplus edged up last year both in dollar terms and relative to the size of the global economy. We suspect that further increases lie ahead as China’s investment spending slows. Meanwhile, the latest data show that the People’s …
14th February 2013
Policymakers will pay little attention to last month’s drop in inflation or the acceleration in exports, given the usual volatility around Chinese New Year. But a surge in off-balance-sheet bank lending may be a concern for officials who, it appears, had …
8th February 2013
The usual rollercoaster around Chinese New Year will have caused inflation to fall in January before sending it soaring this month. Once the seasonal volatility has faded, current evidence suggests inflation will be revealed to be on a mild upward trend. …
7th February 2013
With the People’s Bank determined to limit renminbi appreciation but reluctant to add to its foreign currency reserves, China’s commercial banks have taken on the role of the economy’s foreign exchange buyers of last resort. This cannot last. … Why are …
4th February 2013
China’s official PMI slumped last month, but this index is often choppy around Chinese New Year. We would put more weight on the continued rise in the alternative PMI from HSBC and Markit, as well as our own China Activity Proxy. … Manufacturing PMIs …
1st February 2013
The Capital Economics China Activity Proxy (CAP) points to a sharper economic turnaround than the official figures showed towards the end of last year. In the detail, data on cargo volumes back up disputed customs figures showing export strength. … …
30th January 2013
The Shanghai Composite index has risen 17% since early December. Even so, a trailing price/earnings ratio under 13 and the backdrop of a strengthening economy suggest that prices could rise much further. The large number of potential investors still on …
24th January 2013
Today’s better-than-expected flash manufacturing PMI from HSBC and Markit supports the view that China’s recovery is continuing at the start of the year. But distortions around Chinese New Year mean the latest data are less reliable than usual. … …
Wide income inequality in China is undermining economic stability as well generating concerns about social tensions. … Income inequality is an economic as well as social …
21st January 2013
Today’s Q4 GDP data confirm the turnaround in China’s economy but they show too that it is reliant on the single engine of investment. Continued policy easing would be needed to prolong the acceleration through 2013 but this seems unlikely to happen. As a …
18th January 2013
