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Overseas loans by Chinese banks peaked in late 2021 and have since been curtailed in response to increased debt problems among EM borrowers. While these strains are partly a consequence of global shocks, they have also underscored some flaws with China’s …
16th May 2024
Most analysts expect China’s inflation rate to rebound to around 2% by 2026. In contrast, we think that persistent imbalances between supply and demand will keep it close to zero for the foreseeable future. This will make it harder to manage China’s high …
30th April 2024
All the signs suggest that a second Trump administration would take a more protectionist approach to trade. Export demand in Mexico, East Asia and ASEAN would be particularly hard hit by a universal US import tariff or a dollar devaluation, and those …
29th April 2024
We hosted an online briefing to discuss EM financial risks in more detail. Watch the recording here . Our risk indicators are presented as an interactive EM dashboard on our website here . The past few years have sharpened investors’ focus on assessing …
20th March 2024
The drag from the unavoidable structural decline in China’s property sector has only just begun. Property sales and project starts have collapsed. But property construction activity has retreated only a little. It is likely to halve in the next few years, …
6th March 2024
The policy agenda laid out at the National People’s Congress today is a reasonably pro-growth one. The new fiscal plans are supportive, monetary policy continues to have an easing bias, and the Premier reiterated recent welcome messages about …
5th March 2024
Donald Trump’s previous tariffs did surprisingly little damage to China’s economy, but China may find it harder to shrug off the damage in a rematch. Mr Trump is threatening larger tariff increases if he is elected again. And the factors that cushioned …
23rd February 2024
Despite repeated talk about the need to rebalance China’s economy over the past decade and a half, there has so far been little meaningful reduction in its dependence on investment and on exports. In fact, repeated efforts to shore up short-run growth …
22nd January 2024
During the past decade, the global economy has transitioned out of an era in which globalisation was the key driver of economic and financial relationships into one shaped by geopolitics. Previously, most governments had believed that closer economic …
16th November 2023
Click here to view an online briefing with our team about China's economic plans. It was recorded on 6th March, 2023. The economic plans that have been detailed at the National People’s Congress are more cautious and restrained than had seemed likely …
6th March 2023
There is a touch of the Dr Jekyll and Mr Hyde about China’s climate credentials, with its well-documented record of burgeoning emissions and reliance on coal standing in stark contrast to its increasing influence over the supply of green technology. The …
31st January 2023
Our economists discussed what to expect from the Party Congress and answered client questions in an online Drop-In. The recording can be viewed here . The Party Congress will deliver a major reshuffle of China’s leadership but, with General Secretary …
11th October 2022
China’s leadership has options other than invasion to coerce Taiwan to submit to its political control. The immediate economic and financial ramifications would differ in each case. But any scenario that upset the existing cross-Strait balance would come …
2nd August 2022
In adapting to the threat of having its foreign exchange reserves frozen, the People’s Bank is likely to shift more of its portfolio into unconventional alternatives, including EM sovereign debt and real assets. But as long as the PBOC wants to continuing …
1st April 2022
The economic plans that have been detailed at the National People’s Congress signal that China’s leadership is expecting much weaker growth this year than the relatively upbeat GDP growth target might suggest. However, it does not appear that policy will …
7th March 2022
China and countries that align more closely with it than with the US together account for around half of the world’s population. But the China bloc is far smaller economically than the US bloc and far more dependent on the rival bloc as a source both of …
17th September 2021
This Focus has been updated to incorporate the latest publicly-available information on China’s eCNY project, including the PBOC White Paper published on 16 th July 2021. The original version of the Focus , published on 27 th May 2021, is here . In this …
21st July 2021
In this Focus we detail what is known about how China’s central bank digital currency (CBDC) will operate, when it will launch, what the People’s Bank is trying to achieve, and whether it will succeed. One conclusion is that the launch of eCNY will do …
27th May 2021
China’s new policy blueprint seeks above all to promote a large and hi-tech manufacturing sector, both as a defence against decoupling by the West and as a source of productivity gains. Policymakers are pinning their hopes on rapid domestic innovation to …
15th March 2021
For over a decade, we have tracked the performance of China’s economy independently from the official GDP figures using our China Activity Proxy (CAP). We are now introducing a revamped version of this popular indicator. In this Focus , we discuss why an …
10th September 2020
It is by no means inevitable that the coronavirus crisis puts a big permanent hole in the supply capacity of economies (i.e. their ability to produce goods and services). With the right government policies, many economies should be able more or less to …
29th June 2020
The fiscal plans unveiled by China’s leadership today are as expansive as those in 2009 but credit growth will remain far more constrained. The focus again is overwhelmingly on measures to boost investment, primarily infrastructure. We expect stimulus to …
22nd May 2020
China’s economy is likely to contract sharply in the first quarter, as a result of the measures that have been taken to limit the spread of the new coronavirus. The apparent slowdown in new infections in the last few days should raise hopes that output …
12th February 2020
The trade deal between the US and China marks an end to the first phase of the trade war. China’s pledges on imports from the US are unlikely to be met but that may not matter to the deal’s long-term success. It removes the downside risk of imminent …
15th January 2020
China’s property sector is central to its economic performance, its demand for many materials and the stability of its financial system. In this updated and expanded Handbook, we discuss the drivers of the property cycle and answer key questions on …
9th December 2019
The rift that has widened between China and the US was caused by China’s emergence as a geopolitical competitor to the US, rather than the personality of Donald Trump. Decoupling will continue whether or not the two reach a deal on tariffs. This may spur …
17th October 2019
China is left with few good options to hit back at the US in ways that wouldn’t be self-defeating. Rather than direct retaliation, officials are therefore likely to focus their efforts on broader measures to offset the drag from US tariffs, including …
5th August 2019
The domestic headwinds that have caused China’s economy to slow over the past year are abating thanks to the policy support that has put a floor under credit growth and fuelled local government spending. But policymakers are still concerned about credit …
24th May 2019
Structural headwinds will weigh on China’s growth rate over the coming decade. If well managed, this slowdown will be gradual. But a more abrupt adjustment shouldn’t be ruled out. We see two main threats – political instability that disrupts economic …
16th May 2019
Contrary to the mainstream view that China will keep growing at fairly rapid rates, we expect GDP growth there to slow to 2% by 2030. This slowdown need not in itself be bad for the rest of the world, especially if slower growth continues to be …
2nd April 2019
China’s property sector is crucial to the economy’s performance and to China’s demand for many materials. In this updated and expanded Handbook, we discuss the drivers of the property cycle and answer key questions on affordability, over-investment, …
4th December 2018
China has had a stellar run during the past few decades, achieving sustained rates of growth only ever previously seen in a handful of emerging economies. Most major forecasters expect this outperformance to continue for the foreseeable future. By …
14th May 2018
China’s low-key response to last week’s tariff announcement by President Trump reflects in part a desire not to exacerbate tensions further. But Chinese officials will also be aware that, while they have a number of options for retaliation, restrictions …
28th March 2018
If the long-running skirmishes between the US and China were to escalate into a trade war, China would try to occupy the moral high ground by portraying itself as a defender of free trade. At the time though, officials would use a variety of means that US …
30th January 2018
With the People’s Bank last week tweaking the interest rates on its open market operations, it seems timely to highlight some of the peculiarities of China’s monetary policy framework. One key one is that, as the People’s Bank has still not made a full …
21st December 2017
China’s property sector is crucial to the economy’s performance and to China’s demand for many materials. In this Focus, we discuss the drivers of the property cycle and answer the key questions on affordability, over-investment, demographics and …
30th 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
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
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
