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CAP: Output to stagnate in 2022 despite latest bounce

Our China Activity Proxy suggests that around half of the drop in output during the recent virus wave reversed in May. This recovery looks to have continued in June. But a lot of damage has already been done and we now doubt that China’s economy will grow at all this year. Asia Drop-In (30th June, 09:00 BST/16:00 SGT): Are Asia’s central banks behind the curve? Can the Bank of Japan and People’s Bank of China continue to go against the grain? Find out in our special session on what global monetary tightening looks like in Asia. Register now.  
Julian Evans-Pritchard Senior China Economist
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China Data Response

China Activity & Spending (Jul.)

The July data suggest that the post-lockdown recovery lost steam as the one-off boost from reopening fizzled out and mortgage boycotts triggered a renewed deterioration in the property sector. We think the outlook will remain challenging in the coming months as exports turn from tailwind to headwind, the property downturn deepens, and virus disruptions remain a recurring drag. Asia Drop-In (25th Aug.): What’s the economic impact of a weak yen? What does the latest China-Taiwan flare-up mean for decoupling? How ugly are conditions in China’s real estate sector? Join economists from across our Asia services for this regular briefing on the region’s big investment stories. Register now.

15 August 2022

China Economics Update

Surprise rate cut amid economic woes

The People’s Bank (PBOC) has cut its policy rates in response to a loss of economic momentum. A cut to the Loan Prime Rate (LPR) later this month is now a given and we expect additional easing measures further ahead, though it’s far from clear that this will be sufficient to drive a revival in credit growth.

15 August 2022

China Economics Weekly

PBOC turns less dovish on inflation

The PBOC’s latest monetary policy report struck a less dovish tone, warning that inflationary pressure may increase in the near-term. We think these concerns are overdone and that inflation is more likely to drop back over the rest of the year. But for now at least, the PBOC appears to see inflation risks as yet another reason to maintain its restrained approach to stimulus.

12 August 2022

More from Julian Evans-Pritchard

China Economics Weekly

Goods are piling up at Chinese factories

Soaring inventories of finished goods in China suggest that, contrary to most expectations, recent lockdowns are likely to prove disinflationary domestically. The glut of supply in China is likely to weigh on export prices too.

27 May 2022

China Activity Monitor

CAP: Outbreaks knock output back to 2019 levels

Our China Activity Proxy (CAP) suggests that all of China’s pandemic-era growth has been reversed by recent lockdowns, with output in April no higher than during 2019. Activity should start to rebound this month on the back of easing restrictions. But the recovery is likely to be lacklustre.

26 May 2022

China Economics Update

Policy easing stepping up

The State Council has announced support measures totalling 1.7% of GDP. Most of this comprises incentives for banks to lend to struggling firms, rather than fiscal stimulus. The People’s Bank has also made a call for “all-out” efforts to boost lending, so this does constitute a meaningful policy shift. But the measures that have been detailed so far still fall some way short of what was implemented in 2020. Asia Drop-In (26th May, 0900 BST/16:00 SGT): Can Asia remain the low inflation exception? Join our 20-minute briefing about the region’s price and policy outlooks. Register here.

24 May 2022
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