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This report was first published in response to the PBOC’s cut to its 7-day reverse repo rate. It has since been updated to reflect subsequent developments. 13th June: Additional analysis and charts added. 15th June: Coverage of MLF cut added. 20th June: …
13th June 2023
Note: We’ll be discussing whether China’s post-zero-COVID recovery is already over in an online briefing at 09:00 BST/16:00 SGT on 15th June . Register now . Property support of limited use in isolation Stocks of Chinese property developers surged …
9th June 2023
This page has been updated with additional analysis and charts since first publication. Inflation remains low as initial reopening effects begin to fade Producer price deflation deepened further last month to a 87-month low. Consumer price inflation …
The market optimism which greeted the end of zero-COVID restrictions has quickly given way to gloom after a string of disappointing data releases. Markets are down and speculation is rife that the government will do more to ease policy to give the economy …
7th June 2023
This page has been updated with additional analysis and charts since first publication. Exports stumbled but imports jumped China’s exports contracted year-on-year in May for the first time in three months, with export volumes falling below their …
Second-round effects from reopening still in play Investors have become increasingly bearish on the outlook for household spending in China. Onshore-listed consumer discretionary stocks have now reversed almost all of their reopening gains and those …
1st June 2023
This page has been updated with additional analysis and charts since first publication. Recovery still making headway The PMI surveys suggest that China’s economic recovery was still ongoing in May. Waning fiscal support weighed on construction activity. …
31st May 2023
The renminbi strengthened sharply against the US dollar in response to China’s move away from zero-COVID. But the currency has since reversed much of those gains and is now approaching 7.10/$, its weakest level since December. Optimism over China’s …
30th May 2023
Our China Activity Proxy (CAP) shows that, despite losing some momentum, the economic recovery was still making progress at the start of Q2. And we think there is still scope for further improvement, especially in the service sector. The CAP is our …
29th May 2023
Slow progress tackling construction backlog New home sales have ticked up since the end of last year, helped by a post-zero-COVID recovery in consumer confidence and large reductions in mortgage rates and down-payment requirements. But the improvement has …
26th May 2023
Challenges to China’s long-run growth potential that were mounting a few years ago are now evident to all. We continue to expect trend growth to have fallen to around 2% in 2030. We held an online drop-in yesterday to discuss how our views on China’s …
Chinese government bonds have rallied over the past couple of months, with the 2-year yield falling over 20bps since mid-March. This reflects mounting expectations for monetary easing in response to what has widely been viewed as an underwhelming …
19th May 2023
Over the past couple of weeks we have held a series of roundtable discussions with clients across Asia and North America on the outlook for EMs. In this Update we provide our thoughts on the recurring questions that we received, including on China’s …
This page has been updated with additional analysis and charts since the initial publication. A mixed start to Q2 Growth on most indicators accelerated in y/y terms in April. But this was due to a weak base for comparison from a year ago when Shanghai and …
16th May 2023
An underwhelming set of data published over the past week have added to growing concerns about the state of China’s recovery. Imports , inflation and credit all came in below expectations for April. It might seem hard to square this with the more …
12th May 2023
This page has been updated with additional analysis and charts since first publication. Credit demand much weaker than expected A widely-anticipated acceleration in credit growth didn’t materialise last month, suggesting that momentum may already be …
11th May 2023
This page has been updated with additional analysis and charts s ince first publication. Fluctuations in food and energy prices outweigh impact of reopening Producer price deflation deepened further last month to a 35-month low, and consumer price …
This page has been updated with additional analysis and charts since first publication. Exports set to struggle further China’s export volumes partially reversed March’s jump last month. Shipments of most consumer goods declined due to weak global demand …
9th May 2023
The April PMIs , the last of which was published today, suggest that while the reopening rebound in manufacturing stalled last month, the recovery in services was still going strong. That’s also the takeaway from the five-day Labour Day holiday which …
5th May 2023
The idea of a new BRICS currency to settle trade or hold in reserves instead of the dollar has been doing the rounds recently. This could be modelled on the IMF’s Special Drawing Rights. But getting India on board with China would be difficult. And if the …
4th May 2023
This page has been updated with additional analysis and charts since first publication. Growth still strong but slowing The latest survey data add to wider evidence that while China’s recovery remains robust, it is losing some momentum. In particular, the …
This page has been updated with additional analysis and charts since first publication. Return of tourists propelling city’s rebound Hong Kong’s GDP growth turned positive in Q1 after four consecutive quarters of decline. The economy rebounded more …
2nd May 2023
Property policy recalibration The Politburo held its monthly meeting today and, as is usual in April, its focus was the economy. The gist of its statement is one we’d agree with: economic growth in the immediate rebound from zero-COVID weakness “has been …
28th April 2023
The renminbi surpassed the US dollar to become the most-commonly-used currency in China’s cross-border transactions for the first time last month. Part of the increase – the part that has received plenty of attention – is due to wider adoption of renminbi …
27th April 2023
Our China Activity Proxy (CAP) shows that the economy bounced back rapidly in Q1, with growth since the start of the pandemic now broadly back in line with the official GDP data. And while the recovery will slow, the strong start to the year has …
26th April 2023
Reopening boost to services not tapped out yet The Q1 GDP figures published earlier this week exceeded even our relatively upbeat expectations, helping to settle some of the debate over the strength of China’s recovery. In response , we revised up our …
21st April 2023
This page has been updated with additional analysis and charts since first publication. Growth on course to hit 6% this year GDP rebounded more quickly than expected in Q1 thanks to a rapid return to normality following last year’s virus disruptions. …
18th April 2023
Note: Join our Tuesday 18 th April online briefing discussing what China’s Q1 “data dump” tells us about the strength of the country’s reopening recovery. Register Now . The rebound has exceeded most expectations Mixed data have contributed to differences …
14th April 2023
This page has been updated with additional analysis and charts since first publication. Note: Join our 18th April online briefing discussing what China’s Q1 “data dump” tells us about the strength of the country’s reopening recovery. Register now . …
13th April 2023
China’s Q1 “data dump” on 18 th April will provide the broadest take so far of the economy’s performance following the end of zero-COVID restrictions. Our China team held an online briefing shortly after the NBS release to discuss the quarterly GDP and …
12th April 2023
This page has been updated with additional analysis and charts since first publication. Credit growth still strengthening Bank loan growth jumped to a 17-month high in March. And broad credit growth rose to its highest since December. Both were stronger …
11th April 2023
Inflation set to remain below government’s ceiling this year Producer price deflation deepened further last month to a 33-month low, and consumer price inflation dropped below 1% for the first time in over a year. The key driver was lower food and fuel …
Inflation set to remain below government’s ceiling this year Producer price deflation deepened further last month to a 33-month low, and consumer price inflation dropped below 1% for the first time in over a year. The key drivers were a decline in food …
Infrastructure boosting construction activity The shape of China’s post-zero-COVID rebound has become clearer over the past week: primarily services-driven, as expected, but with stronger construction activity too, which appears to be mostly about …
6th April 2023
Consumer spending jumped during the first two months of the year as virus disruptions faded. The March retail sales data won’t be published for another couple of weeks. But the data we have so far suggest that the consumer recovery remained uneven last …
3rd April 2023
Note: Join our 6 th April online briefing all about the risks to EMs from banking turmoil. Register now . Reopening boost to industrial activity already waning The Caixin manufacturing index was more downbeat than its official counterpart, especially when …
Reopening boost to industrial activity already waning The Caixin manufacturing index was more downbeat than its official counterpart, especially when it came to export orders. Taken together, the surveys suggest that growth in factory activity dropped …
Note: Join our 6th April online briefing all about the risks to EMs from banking turmoil. Register now . China and Brazil are taking steps to allow bilateral trade to be settled in renminbi rather than US dollars. The Brazilian branch of ICBC will …
31st March 2023
Note: Join our 6 th April online briefing all about the risks to EMs from banking turmoil. Register now . Still going strong The official PMIs suggest that China’s rapid reopening recovery remained robust this month. The weak global backdrop weighed on …
Still going strong The official PMIs suggest that China’s rapid reopening recovery remained robust this month. The weak global backdrop weighed on manufacturing but services continued to benefit from a resurgence in consumer spending and construction was …
Our China Activity Proxy (CAP) shows a sizeable rebound in services activity early in 2023. While it hasn’t completely run its course, the recovery will slow over the next few months. The CAP is our attempt to track the pace of growth in China without …
29th March 2023
Overview – Much of the economic boost from China’s reopening has already happened. While there is still some upside to consumer and services activity, weakened balance sheets and limited policy support mean the recovery will probably fizzle out by …
Recent turmoil in the banking sector may have been a US and European story, but there are potentially important angles for Emerging Market investors. Our latest EM Drop-In explored the economic spill-over risks from the recent panic and the …
28th March 2023
Official efforts to curb China’s reliance on imported semiconductors have been going on for years. In 2015, the government set a goal of China being 70% self-sufficient by 2025. But progress toward that target has been much slower than hoped. Only a third …
24th March 2023
While the Credit Suisse rescue might draw a line under that particular institution’s problems, it is clear that confidence in the financial sector overall is still extremely fragile. So regardless of whether more financial institutions run into trouble, …
20th March 2023
China’s financial system has limited direct exposure to foreign banks. But recent global banking strains still pose some downside risk to the country’s economy. While there are signs that the situation is stabilising, it’s too early to rule out a wider …
17th March 2023
The People’s Bank (PBOC) has just announced a cut to the required reserve ratio (RRR). This will provide a bit of financial relief for China’s large and medium-sized banks. It may also help nudge down lending rates slightly. But given the wider signs of …
RRR cut not a major easing move The People’s Bank (PBOC) has just announced a cut to the required reserve ratio (RRR). This will provide a bit of financial relief for China’s large and medium-sized banks. It may also help nudge down lending rates …
A key channel through which emerging markets could be affected by the strains in the global banking sector is if lending by foreign banks falls sharply. On this front, EMs’ vulnerabilities have eased since the Global Financial Crisis. But there are still …
16th March 2023
A stronger start to 2023 Activity data for the first two months were broadly as expected, showing a jump in consumer spending coupled with modest gains in investment and industrial output. High-frequency data suggest that this recovery has continued in …
15th March 2023
