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Resilience of export volumes unlikely to last China’s exporters are doing better than the headlines suggest. Most analysis focuses on what is happening in y/y terms to export values – they have been contracting for six months. Less widely understood is …
10th November 2023
This page has been updated with additional charts and analysis since the first publication. Deflationary returns but is unlikely to persist CPI slipped back into deflationary territory last month. This was mostly due to a drop in food inflation. But core …
9th November 2023
This page has been updated with additional analysis since first publication . Import volumes surpass 2021 peak The year-on-year contraction in export values deepened last month. But this was mainly due to lower export prices. Export volumes were little …
7th November 2023
Over half of cross-border settlement now in RMB Earlier this week, the People’s Bank published its annual report on renminbi internationalisation. The message from the 84-page document is that global use of China’s currency has been gaining momentum …
3rd November 2023
China’s leadership has outlined its wish list for financial sector development. It wants stricter oversight of financial institutions to ensure they serve the interests of the Party and country. This includes providing greater credit support to …
1st November 2023
This page has been updated with additional analysis and charts since first publication. Economy narrowly avoids another contraction Hong Kong’s economy largely treaded water in Q3, underperforming most expectations. A jump in investment and a pick-up in …
31st October 2023
This page was first published on Tuesday 31 st October, covering the official PMIs. We added commentary on the Caixin manufacturing PMI on Wednesday 1 st November, and the Caixin services and composite PMI on Friday 3 rd November. Note: We discussed h …
China’s economy is regaining some momentum after stalling during the summer. A step up in policy support looks set to deliver a modest cyclical recovery but trend growth remains under pressure. … China Chart Pack (Oct. …
30th October 2023
Foreign direct investment into China, as measured by the balance of payments data, has collapsed. It is tempting to pin this on global fragmentation or a loss of confidence in China’s economic prospects. But the key driver appears to be more prosaic: the …
Giving with one hand, taking with the other Earlier this week, China’s legislature increased the government’s planned annual budget deficit from 3.0% of GDP to 3.8%. This was the first mid-year revision since 2008 and only the fifth in the PRC’s history. …
27th October 2023
Our China Activity Proxy (CAP) suggests that growth slowed in Q3. But the economy was regaining momentum at the end of the quarter, led by gains in the service sector. With stimulus still flowing, this recovery should continue over the coming quarters. …
25th October 2023
The additional fiscal support approved today is the intervention we had been expecting and that was needed to prevent an abrupt fiscal tightening in China in the closing weeks of the year. Fiscal policy has been a prop to growth in China over the last few …
24th October 2023
Q3 acceleration may be statistical mirage The GDP figures published earlier this week were stronger than most had expected . They showed that growth accelerated from 0.5% q/q in Q2 to 1.3% in Q3, an annualised rate of 5.3%. But the official q/q …
20th October 2023
We think both the recent outperformance of China’s sovereign bonds relative to those in the US and the underperformance of its equities will end – and may even reverse somewhat – in the near future. Chinese government bonds (CGBs) have largely been spared …
This page has been updated with additional analysis and charts since first publication . According to official GDP, growth more than doubled in q/q terms between Q2 and Q3, reaching a healthy 5.3% annualised rate. Our China Activity Proxy suggests that …
18th October 2023
This is an excerpt from our CE Spotlight series on AI. The whole series can be viewed here . A year ago, China was widely held to be a – perhaps the – global leader in AI. It has an online population larger than the US and Europe combined. Ubiquitous …
17th October 2023
Online briefing about the health of China's economy We'll be online on Wednesday shortly after the release of the September activity and spending data and Q3 GDP. Register here to join us. US export controls about to bite harder The US government is on …
13th October 2023
Credit growth has stabilised After slowing sharply in Q2, broad credit growth edged up in August and held steady last month. Although a sharp rebound seems unlikely, we do think credit growth could pick up somewhat over the coming quarters, especially if …
This page has been updated with additional analysis since first publication . Export volumes hit fresh high but prices falling China’s export values continued to contract year-on-year in September. But to the extent that foreign demand has cooled …
This page has been updated with additional analysis since first publication . Deflation fears to dissipate further PPI deflation continued to ease in September. CPI inflation edged down, but core inflation remained at a six-month high, with services …
An increase in lending to other parts of China’s economy has provided a counter-balance to the slump in in credit demand that was triggered by the property crisis, but it is still only a partial one. That’s not the impression given by a chart that has …
12th October 2023
China’s recent commodity demand has been stronger than might have been expected given the weakness of its economy and commodity-intensive property sector in particular. This partly reflects a step-up in infrastructure spending and resilience in …
The Asian Tiger economies of Korea, Singapore, Hong Kong and Taiwan are likely to be among the biggest beneficiaries of the emergence of new AI technologies. But the boost will not be enough to offset the drag from worsening demographics, and we still …
9th October 2023
PBOC not letting its guard down The yield on 10-year US Treasuries surged to a 16-year high this week. We covered the potential implications for the global economy here . But one of the more immediate consequences has been downward pressure on many EM …
6th October 2023
The sell-off in bond markets has taken a breather today, helped in part by softer data on the US labour market. However, the scale of the moves over the past week has invoked comparisons to previous financial crises that have been caused by sharp moves in …
4th October 2023
Falls in the value of China’s recorded holdings of US Treasuries tell us little about whether China is divesting from the dollar. A broader look at the data suggests that it isn’t, despite geopolitical pressure to decouple. And while we don’t have timely …
Policy support should drive a turnaround The PMI surveys suggest another month of stable economic activity in September. A continued acceleration in construction activity appears to have offset a further softening in services activity. Meanwhile, …
2nd October 2023
Industrial policy isn't an offset for property downturn Can emerging new industries replace property as a driver of China’s economy? There has been a flurry of discussion in the past couple of weeks in China about whether “new-type industrialisation” …
29th September 2023
China’s economy is regaining some momentum after stalling during the summer. A step up in policy support looks set to deliver a modest cyclical recovery but trend growth remains under pressure. … China Chart Pack (Sep. …
28th September 2023
Overview – China’s economy is regaining some momentum after stalling for a brief period during the summer. A step up in policy support looks set to deliver a modest cyclical recovery but trend growth remains under pressure. Consumer Spending – …
27th September 2023
Efforts to boost foreign investment are failing In March, the government launched a year-long “Invest in China” campaign to shore up sagging foreign investment. As part of these efforts, it set out 24 measures in August to improve the business environment …
22nd September 2023
Our China Activity Proxy (CAP) suggests that, after a period of stagnation, China’s economy has returned to growth recently, with output finally surpassing its previous high in August. Policy support is being stepped up, which should underpin a further …
20th September 2023
While policymakers’ efforts to prop up the renminbi and the yen alone are not enough to generate a lasting turnaround , they will probably do enough to buy time until US interest rate expectations and Treasury yields fall back and the dollar depreciates …
15th September 2023
Property controls have been substantively relaxed in recent weeks. The big announcements came on the last day of August. But there has since been plenty of easing at the local level too. At least ten large cities have lifted all home purchase …
This page has been updated with additional analysis and charts since first publication. Economy regains momentum as consumers step up Although a slight uptick in activity was expected, the August data turned out to be even better than anticipated. Fiscal …
A gesture of support from the PBOC The People’s Bank has just announced a cut to bank reserve requirements. With private sector credit demand still weak, this is a gesture rather than a meaningful support measure. Substantial rate cuts or a sea change in …
14th September 2023
The quantitative tools that the PBOC relied on to pump up credit growth during previous downturns have become ineffective due to weak demand. That leaves interest rates as the main avenue for monetary support. But bank lending rates need to decline to a …
11th September 2023
This page has been updated with additional analysis since first publication . Turning a corner thanks to policy support China’s bank loan growth stabilised in August after declining for three consecutive months, and broad credit growth edged up from …
Disinflationary pressures easing CPI exited deflation in August, and PPI rose for the first time in nine months. Core inflation remained unchanged after hitting a 11-month high in July, while services inflation rose to its highest in 18 months. We expect …
Huawei's chip breakthrough The launch of Huawei’s new phone, the Mate 60 Pro, has sparked a debate over the effectiveness of US export controls that were tightened last year, restricting the sale to China of machinery needed to produce sub-18nm chips. The …
8th September 2023
This page has been updated with additional analysis since first publication . Export volumes are likely to soften before long China’s export values continued to contract in August, but this mostly reflects lower prices. Export volumes continued to hold …
7th September 2023
Stimulus efforts are finally gaining momentum. Yesterday, regulators announced measures to support households and shore up the property sector, including looser downpayment requirements and reductions to existing mortgage rates. And today, the state banks …
1st September 2023
China's reopening recovery has fizzled out and the economy is now at risk of a downward spiral. We think policymakers will provide enough stimulus to avoid this and deliver a modest reacceleration in growth over the coming quarters. But most of the …
31st August 2023
This page was first published on Thursday 31 st July, covering the official PMIs. We added commentary on the Caixin manufacturing PMI on Friday 1 st September , and Caixin Services and Composite PMIs on Tuesday 5 th September. Note: We discussed the China …
Our China Activity Proxy (CAP) suggests that China’s economy regained some ground in July, following a contraction in June. But the big picture is that output has levelled off recently and that the economy could tip into a downward spiral unless policy …
29th August 2023
Note: We’ll be discussing the China growth/stimulus question, the BOJ’s policy outlook, Indian food price inflation and more in our monthly Asia Drop-In on Thursday, 31 st August . Register here to join the online briefing. Have the leadership given up on …
25th August 2023
But they aren’t as big a systemic threat as some fear In addition to troubles at Country Garden , the big story in China’s credit markets this week was the turmoil at Zhongzhi. Yesterday, the asset manager cum shadow bank acknowledged that it was in a …
18th August 2023
With the headwinds growing for China’s economy, we think its equity markets will struggle, its 10-year yield will continue to fall and its currency won’t rebound as quickly as we’d thought. At the start of the year China’s economy was powering ahead. But …
17th August 2023
China’s economy has stalled recently and headwinds are still intensifying on multiple fronts. The lack of a stronger stimulus response partly reflects a greater tolerance for economic weakness. But it also points to a worrying degree of policy paralysis, …
Note: We’ll be discussing the economic and financial risks facing China’s economy, and their implications for global markets, in an online briefing on Thursday, 17th August. Register here to join. Financial problems at Country Garden, once considered …
16th August 2023
