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Today’s lending data released by the People’s Bank support the view that current policy support is insufficient to drive a prolonged acceleration in economic growth. … Lending and total social financing …
11th December 2012
Today’s disappointing trade data have added to our doubts about the sustainability of China’s rebound. The weekend’s figures on investment and industrial production were more encouraging but they underlined that recent strength has been driven by …
10th December 2012
China’s consumer price inflation is picking up and could spike much higher around February’s Chinese New Year holiday. It will be higher than today once that seasonal distortion passes, but we don’t think the level will be alarming. … Inflation Monitor …
6th December 2012
China’s two manufacturing PMIs are both above 50 for the first time in over a year. But the recovery is unbalanced, with smaller firms reporting that conditions are the weakest in six months. … Manufacturing PMIs …
3rd December 2012
The government is likely to set a low target for growth next year that the economy will beat. But expectations that China’s growth will continue to accelerate through 2013 are likely to be disappointed. In this month’s China Watch we outline our views on …
30th November 2012
Purchases of foreign exchange by the People’s Bank have slowed to a crawl this year. We believe this is a pause in, rather than the end of, China’s era of massive foreign reserve accumulation. … PBC foreign exchange purchases set to …
29th November 2012
Today’s flash manufacturing PMI from HSBC and Markit provides further reassurance that recovery is underway, but hopes for a strong rebound will probably be disappointed given lingering weakness in domestic demand and uncertainty overseas. … HSBC/Markit …
22nd November 2012
The Capital Economics China Activity Proxy (CAP) confirms that China’s economy has picked up speed. So far though, the recovery still looks weak and lopsided, with key sectors being left out. … A real …
21st November 2012
For years, the abiding view of China has been of a workshop powered by waves of young migrants able to outcompete workers elsewhere on the basis of low wages. This image is increasingly wide of the mark. The wage of the average migrant worker has …
The last two months have brought strong evidence that China’s economy is picking up speed. But this is a lopsided recovery. Small firms are still struggling, according to the official manufacturing PMI, while investment in manufacturing continues to slow. …
20th November 2012
Hong Kong’s economy returned to growth in the third quarter, but the pace of expansion was still very weak. With the global economy likely to remain depressed over the next year, a strong rebound looks unlikely anytime soon. … Slow growth in Hong Kong …
16th November 2012
The unveiling of China’s new leadership in the Great Hall of the People today has dented hopes of economic policy reform. Of the three “reformist” candidates thought to have had a chance of joining the Politburo Standing Committee, the Communist Party’s …
15th November 2012
A new government scheme to stabilise China’s volatile pork market appears to be succeeding. As a result, the re-emergence of pork-driven inflation that some have started to warn about is unlikely to happen. … Should we worry about pork prices …
14th November 2012
The tepid pace of bank lending revealed in figures released today will not be much of a concern to policymakers given the upbeat tone of recent economic data, including October’s double-digit increase in exports. … Slow loan growth no concern given …
12th November 2012
China’s October activity data provide the strongest signs so far of economic recovery. Given that they have been published while the Party Congress is in session, some sceptics have questioned whether they can be believed. In our view, there is solid …
9th November 2012
A further doubling of average incomes this decade, as pledged in the Party Congress today by President Hu Jintao, will probably not undermine China highly-competitive manufacturing sector. … Are rising wages hurting China's …
8th November 2012
The imminent leadership change in China is a more significant event for emerging economies than the re-election of President Obama. The installation of a cohesive Chinese leadership committed to putting the economy on a more sustainable footing would …
7th November 2012
China’s consumer price inflation was stable in October, we believe. Looking ahead, both inflation and economic activity look likely to pick up some pace in the next few months, weakening the case for further policy stimulus. … Inflation Monitor …
6th November 2012
For emerging Asia as a whole, private sector credit as a share of GDP has surged over the past few years and is now at an all-time high, leading some commentators to suggest that the region could be planting the seeds of the next financial crisis. We are …
1st November 2012
The pick-up in China’s two manufacturing PMIs provides further signs of recovery in October, with particular strength in new orders. … Manufacturing PMIs …
China’s once-in-a-decade leadership transition reaches a climax in November when a new generation takes control of the Party. In this China Watch , we ask who the key figures of the new leadership are likely to be and give some rough thoughts on what the …
31st October 2012
The renminbi has risen 2% against the dollar since the end of July, erasing all of its losses in the year to date. There appear to be two factors at work. One is a renewed appetite for the renminbi among firms and investors. China’s trade surplus has …
30th October 2012
A declaration by a US administration that China is a “currency manipulator” may have no immediate consequences but it would open the door to more substantive trade sanctions against China in future. … “Currency manipulation” tag would still carry …
29th October 2012
Some commentators have turned optimistic about the outlook for Chinese residential property. We remain of the view that, with inventories still high, a big pick-up in property investment is unlikely. Moreover, if it did happen, this would be negative for …
25th October 2012
Today’s flash manufacturing PMI from HSBC and Markit provides further signs of a mild recovery in China’s economy. … HSBC/Markit Flash Manufacturing PMI (Oct. …
24th October 2012
The Capital Economics China Activity Proxy (CAP) provides further evidence that the pace of growth in China’s economy accelerated last month. … Activity strengthened at …
23rd October 2012
Today’s data releases provide the strongest signs yet that China’s economy stabilised in Q3, along with glimmers of hope that a recovery began towards the end of the quarter. But we are sceptical that the rebound is as strong as the official numbers …
18th October 2012
Debates over whether China is facing a “hard landing” generally miss the point that an economic slowdown can affect different groups in different ways. Right now, Chinese policymakers seem not too concerned that the economy is slowing as the labour market …
17th October 2012
The September import data suggest China’s economy was still weak at the end of Q3. By contrast, last month’s exports were unexpectedly strong, as they were for both Korea and Taiwan, with demand from emerging economies offsetting weakness in the US and …
15th October 2012
The apparent strength of tourism and spending during October’s “golden-week” holiday has revived hopes that China could experience a consumer-led rebound. But there is little convincing evidence that spending growth is doing anything better than standing …
Unexpectedly weak bank lending in September was offset by strong growth in other forms of credit. But credit overall is not growing at a speed likely to fuel a significant economic rebound. … Lending and total social financing …
12th October 2012
Inflation in consumer prices was probably little changed in September. But the outlook is for higher inflation over coming months, which will make policymakers more cautious about further stimulus. … Inflation Monitor …
4th October 2012
China’s two manufacturing PMIs both picked up in September but give no strong reason to believe that we are on the cusp of a sustained rebound. … Manufacturing PMIs …
1st October 2012
China’s economic slowdown is the result of policy tightening and weak global demand but it also reflects structural shifts in China’s economy. As a result, expectations for a strong and sustained rebound in China’s growth are likely to be disappointed. … …
27th September 2012
Today’s flash manufacturing PMI from HSBC and Markit provides signs of stabilization in China’s economy but not of recovery. … HSBC/Markit Flash Manufacturing PMI (Sep. …
20th September 2012
The Capital Economics China Activity Proxy (CAP) suggests that the economy stabilised in August but GDP growth is still likely to slow over Q3 as a whole. … Q3 growth on course for another big …
19th September 2012
Talk of a new stimulus package in China produced a 4% rally in the Shanghai Composite in the space of two days earlier this month. The turnaround was triggered by the government’s announcement that it had approved a large number of investment projects. …
17th September 2012
We can see no sign of a fresh stimulus in the government’s recent announcements that it has approved a large number of infrastructure projects. Most were already expected to go ahead and, while the headline value of these projects is fairly impressive, …
12th September 2012
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
