Pessimism about the potential for future productivity growth and hence increases in living standards, based on recent poor productivity performance, is not well-founded. It provides no good reason to believe that the world is now incapable of technical …
1st November 2017
The upcoming Party Congress will deliver a major reshuffle of China’s leadership and determine President Xi Jinping’s ability to implement his policy priorities over the next five years. In this report, we provide an overview of how the Congress will …
11th October 2017
The recent elevation of Saudi Arabia’s Mohammed bin Salman to crown prince has raised hopes of a renewed impetus to push through his Vision 2030 reform programme. But, while the scope of the programme is impressive, it will face numerous implementation …
27th June 2017
1st July marks the 20th anniversary of Hong Kong’s return to China. The city’s economy has continued to prosper over the last two decades, defying gloomy predictions made by some before the handover. But politically the relationship between China and Hong …
23rd June 2017
The outlook for China’s banks is going from bad to worse. Pressure on the banking system has increased during the past year even though economic activity has recovered. And with a renewed slowdown now on the cards, the health of China’s banks looks set to …
1st June 2017
Evidence of a sharp turnaround in growth and policymakers’ success in preventing a destabilising slide in the renminbi have underpinned a dramatic shift in sentiment towards China. But there are good reasons to expect growth to slow again soon and for the …
28th March 2017
We estimate that sectors responsible for two-thirds of China’s industrial output now suffer from overcapacity. Despite this, policymakers continue to drag their feet on reform due to fears that deep capacity cuts would cause a rise in lay-offs and an …
1st March 2017
India is often heralded for demonstrating a new path to middle income by focusing on the development of its services sector rather than on significant industrialisation. It is true that India’s services sector has grown more rapidly than in most other …
28th November 2016
Widespread expectations for a sustained rebound in emerging market growth after the slowdown of recent years will be disappointed. The 2000s were a transient “Golden Age” for the emerging world, with a number of one-off supports for rapid growth that …
13th October 2016
The People’s Bank has taken a major step towards a more orthodox approach to monetary policy by adopting a de facto target for the interbank rate. Although this shift has taken place with little fanfare, it has important implications for how monetary …
10th October 2016
An across-the-board 45% tariff on imports from China may end up raising retail prices in the US by only 10%, and less still if Chinese policymakers responded by allowing the renminbi to weaken. With exports to the US driving only 3% of China’s GDP and few …
29th September 2016
A number of voices have begun loosely using the term “liquidity trap” to argue that stronger credit growth in China has failed to provide a greater boost to output because firms are hoarding cash rather than spending it. But the money supply data being …
2nd September 2016
A year after tumbling equity prices in China triggered fears about a collapse in the economy, the crisis many feared has not materialised. While more jitters are possible, a slump in growth over the months ahead remains unlikely. But slow progress in …
28th June 2016
The latest survey on migrant workers, who are often the first to suffer when economic and labour market conditions deteriorate, confirms evidence elsewhere of weakness in key parts of the economy. And although the gains from rural to urban migration won’t …
3rd June 2016
China is targeting average annual growth of at least 6.5% over the coming five years. Such rapid growth, which would place China in the top 10% of what has been achieved historically by other countries at its income level, is unlikely to be achieved. …
31st March 2016
The inept response by China’s policymakers to the pressures of the last few months has rightly diminished confidence in their ability to handle the structural transition China faces in the years ahead. But there is little evidence that the economy is …
17th February 2016
When the PBOC cut benchmark interest rates late last month, it also removed the regulatory ceiling on banks’ deposit rates. This final step in liberalising interest rates came sooner than many had anticipated. We take it as a sign that policymakers remain …
3rd November 2015
China’s leadership is likely to use its forthcoming Five-Year Plan to signal that it is not wavering on the need for structural reform. In fact, progress over the first three years of President Xi's term has been more far-ranging than generally …
22nd October 2015
With government and corporate bond yields at all-time lows in most of Europe and equity dividend yields close to their long-term averages, European commercial property looks relatively well-priced. The greatest value appears to be in some of the …
8th October 2015
The UN’s projection that India will become the world’s most populous nation as soon as 2022 has refocused attention on the country’s remarkable demographic potential and the impact this could have on its economic development. The key challenge for India’s …
27th August 2015
Structural changes in China’s economy are transforming its economic relationship with the rest of the world, as domestic demand shifts from investment to consumption, outbound tourism surges and the private sector rather than the People’s Bank directs …
7th July 2015
Those hoping that a loosening of mortgage controls, announced by the People’s Bank yesterday, will set the stage for a recovery in the property sector are likely to be disappointed. Relatively tight liquidity conditions, as a result of official efforts to …
1st October 2014
Cuts to benchmark interest rates could end up doing more harm than good to China’s economy. Policymakers worried about elevated financing costs in the corporate sector would do better to focus on improving access to credit for smaller, more productive …
4th August 2014
A hard landing in China’s economy is one of the biggest risks clouding the outlook for the rest of Emerging Asia. A slump in Chinese demand would hurt economies with close trade links to China, with commodity exporters likely to be especially hard-hit. A …
15th April 2014
A growing number of economists are challenging the view that China invests too much and consumes too little by arguing that the official data grossly understate consumption and overstate investment. There is a degree of truth to these claims. But the …
2nd April 2014
China’s cash crunch has shone a spotlight on its interbank market, which investors without a close interest in China’s banking and financial sector previously paid little attention to. In this month’s China Watch , we give a brief primer on the interbank …
27th June 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 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
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 …
6th September 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
China’s investment-driven economic model is not showing signs of strain at present but growth is unlikely to be as smooth as most expect over the next few years. We have pencilled in a well-below-consensus forecast for 2013. … Is investment-driven growth …
3rd August 2011
Most of emerging Asia should continue to grow rapidly for at least another decade, and much longer if the right policy choices are made. The key exception is China where, despite a bright long-run outlook, structural reform is needed sooner rather than …
5th July 2011
China’s trade surplus looks much smaller from within the country than it does from abroad. China’s customs data put the goods surplus last year at 3% of GDP. China’s trading partners reported a collective deficit with China three times as large. Who is …
17th June 2011
Today’s tensions between China and the US have many echoes of those between Japan and the US in the 1980s including, most clearly, over the exchange rate. The lesson for China is not, as some have suggested, that China should withstand US pressure on its …
8th November 2010
The government has announced a series of moves over the last month designed to push the renminbi along the road to becoming an international currency. But major obstacles stand in the way, not least the government’s reluctance to allow unfettered …
6th September 2010
China no longer has a surplus of underemployed workers in the countryside willing to move elsewhere for rock bottom wages, but it does still have a large and inefficient agricultural workforce. Their continued migration into manufacturing and services …
29th June 2010
A little-noticed report published last week by the People’s Bank of China (PBC) gives arguably the best estimate yet of how much China’s economy slowed at the end of last year and how rapidly it has since accelerated. … A new angle on Chinese …
7th August 2009
Thirty years after the launch of reform in China, the experience of Japan and the Asian tigers underlines the need for China to shift its economic model if it is to sustain rapid growth over the medium term. … Is China running out of steam after 30 years …
24th November 2008
China’s announcement of a huge fiscal stimulus package is an attempt to shock and awe Chinese firms and households to keep spending. If it succeeds, the government will end up spending much less than the headline figures suggest. … China’s fiscal package …
10th November 2008
Fiscal policy could make a significant contribution to reducing China’s massive current account surplus, though discussion of rebalancing often overlooks its potential. The government has the resources to increase spending or cut taxes now, but it is …
17th April 2008
