China Bank Lending & Broad Credit (Aug.)

Credit growth dropped in August to its slowest pace since December 2018. With the PBOC now shifting gears to a slightly more supportive stance, credit growth may level off in the coming quarters. But the usual lags mean that tight credit conditions will remain a headwind to economic activity in the near-term.
Julian Evans-Pritchard Senior China Economist
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China Data Response

China Official PMIs (Nov.)

The official PMIs suggest that industrial activity rebounded this month thanks to easing disruptions from power shortages while a renewed virus flare-up held back the recovery in services. And while we know little about its transmissibility and severity, the new Omicron variant could hold back a further economic recovery. On a more positive note, the surveys point to easing price pressures.

30 November 2021

China Chart Book

Omicron tests China’s zero-COVID strategy

The global spread of a more transmissible COVID variant is a particular challenge for a country trying to remain COVID-free. But after nearly two years of success suppressing infections domestically, the bar to changing course before better medical treatments or vaccines are available is high. A study published last week by the Chinese Center for Disease Control and Prevention estimated that if China were to adopt the pandemic control measures recently in place in several Western countries, it would soon be facing several hundred thousand new cases per day and 10-20,000 severe cases. These estimates were deliberately conservative, made on the assumption that natural and vaccine-derived immunity is as high in China as in the comparator countries. The actual health cost, the authors argue, would almost certainly be higher. Given these concerns, if Omicron proves harder to contain than Delta, we would expect officials to tighten containment measures in response. Economically, that would lead to further intermittent disruption to domestic activity, particularly services, and to global supply chains.

29 November 2021

China Economics Weekly

Capacity constraints put a ceiling on export outlook

In the long-run, the global spread of highly-transmissible coronavirus strains may make China’s zero-COVID stance untenable but the immediate response to concerns about B.1.1.529  is more likely to be a doubling down on the strategy, with rolling local lockdowns in response to any local cases and continued tight border controls. China’s exporters could benefit from another wave of lockdown-induced demand elsewhere in the world. But capacity limits, particularly at ports, potentially exacerbated by further port shutdowns, may limit their ability to meet orders.

26 November 2021

More from Julian Evans-Pritchard

China Economics Weekly

Evergrande credit risks, border controls

China’s banking system has large enough capital buffers to absorb an Evergrande collapse provided that the PBOC steps in to backstop the interbank market. Meanwhile, the one-sided reopening of the HK-mainland border says a lot about the priorities of Hong Kong officials and the continued caution of their mainland counterparts.

10 September 2021

China Data Response

China Consumer & Producer Prices (Aug.)

Producer price inflation reached its highest since August 2008 last month due to the rally in global commodity prices. But the breakdown suggests that upward pressure on the factory-gate prices of consumer goods is easing. Coupled with continued declines in food prices, this dragged consumer price inflation back below 1%. We think PPI inflation is likely to ease before long while CPI inflation will remain muted this year.

9 September 2021

China Data Response

China Caixin Manufacturing PMI (Aug.)

The Caixin manufacturing index dropped to an 18-month low in August, adding to signs from the official PMI released yesterday that industry is coming off the boil. The surveys point to worsening supply shortages amid the Delta outbreak. But there are also signs that demand is weakening too.

1 September 2021
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