Downhill from here?

Our China Activity Proxy (CAP) suggests that growth accelerated in q/q terms last quarter but that output edged down in June on the back of softer industrial and construction activity. We think China’s COVID-19 rebound has reached its limits and that output will drop back further during the rest of this year.
Julian Evans-Pritchard Senior China Economist
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China Economics Update

PBOC takes a bigger bite of the easing apple

The People’s Bank (PBOC) has stepped up its efforts to loosen monetary conditions, following up last month’s reduction to the Loan Prime Rate (LPR) with cuts to the rates at which it lends to banks. Another LPR cut this month is now a given and we expect additional easing measures further ahead.

17 January 2022

China Data Response

China GDP (Q4), Activity & Spending (Dec.)

Official GDP growth beat expectations last quarter and in q/q terms was the strongest since late 2020. But we are sceptical that this reflects the reality on the ground – our China Activity Proxy suggests output was largely stagnant last quarter. With the property sector still struggling and virus disruptions becoming more frequent, economic momentum is likely to remain weak throughout much of this year.

17 January 2022

China Economics Weekly

Omicron arrives

It is too soon to conclude that Omicron will swamp China’s efforts to suppress COVID. But the policy of “dynamic clearing” is facing a severe test. Data due over the coming week will reveal the economic strain that it is causing.

14 January 2022

More from Julian Evans-Pritchard

China Data Response

China GDP (Q2), Activity & Spending (Jun.)

China’s GDP growth dropped back in y/y terms last quarter as the base for comparison became less flattering. In q/q terms, output rose at a slightly faster pace than in Q1, when a flare-up in virus cases weighed on services activity. But sequential growth remained more subdued than over most of the past few years and momentum is likely to remain weak during the second half of this year.

15 July 2021

China Data Response

China Trade (Jun.)

Headline trade growth was stronger than expected last month, partly thanks to an increased supply of semiconductors. But exports remained below their recent peak and we still think shipments will soften in the coming quarters.

13 July 2021

China Economics Update

RRR cut marks shift in focus, even if not major easing

The People’s Bank (PBOC) has just announced a 50 basis point cut to the required reserve ratio (RRR) for most banks. This is less of a lurch towards monetary easing than it might seem at first glance – it is partly intended to offset tightening elsewhere. But it is nonetheless the clearest sign yet that policy priorities are shifting away from exiting stimulus towards managing structural headwinds.

9 July 2021
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