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The Hong Kong government has introduced a number of measures to improve housing affordability. We don’t believe these measures will have their intended effect, and that in the short-term property prices will continue to rise. However, this only increases …
11th September 2012
The strength of bank lending in August is a rare piece of positive economic news from China after weeks of downbeat data. But any optimism should be tempered by the fact that borrowing by firms, as opposed to households, remains weak. … Lending, broad …
The continued weakness in China’s monthly data has prompted us to knock down our forecast for GDP growth this year. Next year is likely to be disappointing too. … Growth expectations edge …
10th September 2012
Consumer price inflation probably picked up slightly last month. It is likely to rise further in coming months, constraining policymakers’ ability to support the economy. … Inflation Monitor …
7th September 2012
China will unveil a new group of leaders in the next few weeks. There are tentative signs that they will finally start to grapple with the structural challenges facing the economy. … Glimmers of reform ahead of leadership …
6th September 2012
China’s economic prospects depend in large part on what happens to its property market. In this Focus, we answer the key questions on affordability, empty housing and over-investment that will determine the sector’s health and its likely impact on growth …
China’s two manufacturing PMIs both dropped in August to their lowest levels since November last year. Small firms are struggling, which is no great surprise. But large firms are finding conditions difficult too, a sign that policy stimulus is not having …
3rd September 2012
When the global financial crisis hit, a surge in real estate investment helped China’s economy escape the slump. The government in Beijing is trying to engineer a recovery from the current downturn while keeping its controls on the sector intact. But the …
29th August 2012
The Capital Economics China Activity Proxy (CAP) suggests that the economy slowed in July after steadying at the end of Q2. A further deterioration in exports and real estate construction has overwhelmed the positive impact of recent policy stimulus. … …
27th August 2012
The People’s Bank of China has this week conducted the most aggressive open market operations of the year, leading to questions over whether it is shifting away from its reliance on the required reserve ratio (RRR) as a key policy tool. We believe the RRR …
24th August 2012
The weakness in today’s flash PMI suggests that hopes for an economic recovery in the current quarter will be dashed, again. … HSBC/Markit Flash Manufacturing PMI …
23rd August 2012
Market sentiment about China’s property policy has executed an abrupt U-turn. Early this year, speculation was mounting that the government would loosen its controls on the sector in response to the wider economic slowdown. China’s economy overall is …
21st August 2012
Months after policy was loosened, investment growth has barely responded. State-directed investment is picking up but not by enough to offset the reluctance of real estate developers and the rest of the private sector to spend. … Why is investment not …
16th August 2012
Hong Kong’s economy contracted in Q2. With global growth set to disappoint over the next couple of years, we expect Hong Kong’s trade-dependent economy to continue to struggle in the coming quarters. … Hong Kong economy unlikely to rebound anytime …
10th August 2012
Today’s trade and lending figures brought more disappointment. Exports to the US suffered their worst drop since late-2008, while lending fell well short of expectations. … Foreign Trade …
China’s stimulus efforts are feeding a pick-up in infrastructure investment but recovery has not so far spread to the rest of the economy. … Economic rebound remains …
9th August 2012
Fears about capital leaving China are overdone. Recent pressure on the People’s Bank to sell foreign exchange appears to be the result of greater willingness among Chinese firms to hold on to their dollar receipts rather than a rush of capital heading …
8th August 2012
Local governments across China have unveiled a series of stimulus plans, echoing the recent message from top authorities of the need to ensure strong growth. More stimulus plans are likely to follow soon. However, their impact will be much smaller than …
3rd August 2012
Both of China’s manufacturing PMIs for July were slightly worse than anticipated. However, they are still in keeping with recent policy stimulus taking effect. In particular, small firms look to be benefiting. … Manufacturing PMIs …
1st August 2012
Consumer price inflation should have fallen slightly in July. Although we expect a gradual pick-up in the months ahead, overall inflation is likely to remain low, allowing policymakers’ focus to stay on supporting growth. … Inflation Monitor …
31st July 2012
The renminbi’s rise against the dollar stalled at the beginning of 2012 and the currency has fallen back in the last few weeks. The scale of depreciation to date is small – little more than 1% since early May – but this is the first sustained period of …
26th July 2012
Conditions in China’s manufacturing sector have improved, according to today’s flash PMI, although the recovery could not yet be described as strong. … HSBC/Markit Flash Manufacturing PMI …
24th July 2012
The recent surge in global agricultural commodity prices – if sustained – will add to the downside risks to China’s economy but it is unlikely to be a decisive factor. Overall inflationary pressures are weak and the authorities will not be deflected from …
23rd July 2012
The Capital Economics China Activity Proxy (CAP) suggests that the broad economy stopped weakening in June, providing some support to the view that activity will pick up in the next few quarters. … Growth steadied at …
China’s economy is growing at one of the slowest rates in years but the labour market is showing few signs of strain. Migrant wages were up 13% y/y last quarter. There are still more jobs being advertised at local employment bureaus than there are job …
19th July 2012
We continue to believe that China’s economy is not doing as well as the already downbeat official figures suggest. But there are signs that growth will soon pick up. … GDP (Q2), retail sales, ind. output etc. …
13th July 2012
Today’s strong lending data cast last week’s rate cut in a new light. Policy is being eased further even though earlier stimulus measures had already started to take effect. That suggests the government is hoping for a significant rebound in GDP growth. …
12th July 2012
Three points leap out from China’s June trade data. Exports to the US have taken a sudden turn for the worse. Commodity imports have slumped. And the trade surplus has returned to the level it was at before the global financial crisis. … Foreign Trade …
10th July 2012
Consumer price inflation tumbled last month. Underlying price pressures are weak and will be no constraint to further policy easing. Premier Wen made clear over the weekend that the government intends to keep loosening policy. … Consumer & Producer Prices …
9th July 2012
China’s frozen property market is showing signs of a thaw. Sales took off in the second half of June and prices are rising for the first time in months. Recovery in the sector would help haul the economy out of its current weak patch, but at the cost of …
6th July 2012
Today’s unexpected interest rate cut suggests that policymakers in China are increasingly rattled by the state of the economy. The move’s loosening impact will be amplified by the decision to increase the discount to the benchmark lending rate that banks …
Consumer price inflation tumbled to near 2% y/y in June, we believe. With the government pushing up electricity prices for heavy residential users starting this week, the headline rate may not get much lower. But inflation has already disappeared as a …
4th July 2012
Both China’s manufacturing PMIs weakened again last month but there were some positive signs. … Manufacturing PMIs (Jun.) …
2nd July 2012
Questions are again being asked about whether we can trust China’s economic data. Our attempts to track the speed of the economy using our China Activity Proxy do not support suggestions of widespread manipulation. But they do suggest that growth was …
29th June 2012
The Capital Economics China Activity Proxy (CAP) points to a further decline in GDP growth this quarter, with construction and service sector activity particularly weak. … Property holding economy …
22nd June 2012
China’s manufacturing sector slowed again in June, according to today’s flash PMI, as new export orders dropped away and finished goods inventories rose. Prices seem to be falling fast, opening more space for policy easing. … HSBC/Markit Flash …
21st June 2012
Business confidence has deteriorated again this quarter, loan demand has dried up, and most households are unusually concerned about their income prospects. However, sentiment towards the property market may be improving. … The view from the ground - Q2 …
19th June 2012
There were signs in May’s data that economic growth was stabilising. In particular, industrial output growth reversed a small part of the April slump. This was most likely the result of a pick-up in infrastructure project approvals in the last few months …
14th June 2012
China seems to have avoided the deep property slump that many were predicting. But neither property prices nor real estate investment are likely to experience a sharp rebound. … Property outlook …
A provocative new paper by Joseph Yam, the former head of the Hong Kong Monetary Authority, calling for the territory to review its currency peg to the US dollar has once again raised questions over the future of the Hong Kong dollar. Overall, we believe …
13th June 2012
The May data brought evidence that conditions in China’s economy stopped deteriorating last month and may have moderately improved. With its banks now pumping out loans to willing state-owned borrowers, we expect an economic rebound to follow. … Banks …
11th June 2012
Consumer price inflation probably eased only slightly in May, but we expect larger falls to come in the next couple of months. This should reassure policymakers that they can continue to focus on supporting economic growth. … Inflation Monitor …
8th June 2012
Today’s benchmark interest rate cuts are a strong signal that policymakers are going all out to shore up China’s economy. Commercial banks are also being allowed to set both lending and deposit rates within a wider range, which magnifies the extent of …
7th June 2012
Recent weak data from China has led to renewed fears of a hard landing in Asia’s biggest economy. The countries most exposed would be those for which China is an important export market such as Hong Kong and Singapore, as well as big commodity exporters …
6th June 2012
There was further disappointment in today’s manufacturing PMIs from China. But the May surveys were largely conducted before the shift of policy stance in the last third of the month and so tell us nothing about the success of stimulus efforts so far. … …
1st June 2012
Despite a healthy budget position, the stimulus plans being unveiled in China are heavily-weighted towards investment. In this China Watch we ask why fiscal options are being neglected. We also look ahead to the coming month’s data releases. Expectations …
China’s two manufacturing PMIs are now among the world’s most closely-watched pieces of economic data. In this Focus, we take a close look, highlighting which of the two indices and their components are worth tracking and some areas where the conventional …
31st May 2012
China’s policymakers have the ability to shore up economic growth in the short-term. But in doing so, they will increase the chances that the economy will experience a sharper slump two or three years down the line. The attached Update is adapted from an …
24th May 2012
China’s flash manufacturing PMI for May was, again, very weak. But a turnaround may not be far away, given the recent shift in policy stance. … HSBC/Markit Flash Manufacturing PMI …
We believe that the stimulus efforts unveiled in the last few days will be sufficient to drive an economic recovery in the second half of 2012 but at the cost of further entrenching China’s economic dependence on investment. … Stimulus set to fuel …
23rd May 2012
