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China Bank Lending & Broad Credit (May)

Credit growth was stronger than expected last month. It is likely to accelerate following the clear signal in late May that policymakers want banks to step up lending. More policy easing is likely. But private sector credit demand is likely to remain subdued while, on current budgetary plans, local government borrowing is about to slow. A dramatic increase in credit growth still seems unlikely.
Mark Williams Chief Asia 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 Mark Williams

China Economics Update

What impact would removal of Trump tariffs have?

Cancelling all of the Trump tariffs on China would give a smaller direct boost to China’s export sector than many might think. More important would be the signal a unilateral rollback would give that the US wanted a reset in relations. This would lift investor sentiment towards China along with domestic financial markets and the renminbi. However, there’s no sign that the US wants a reset. Any tariff removal is likely to be limited and its economic and financial market impact very small.

9 June 2022

China Economics Update

Why won’t the government help households?

The view that policy support is best directed towards investment rather than consumption is deeply rooted in China. A few token consumer voucher schemes aside, this doesn’t seem to be changing.

8 June 2022

China Economics Weekly

Show us the money

The State Council has expanded on its call for policy support for the economy to be stepped up. But nothing has been done about the funding strains faced by local governments who bear much of the responsibility for implementation. Those strains are about to get worse since fiscal transfers and bond issuance have both been front-loaded this year and are about to dry up. Local authorities are approaching a fiscal cliff while the central government is telling them to go faster.

2 June 2022
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