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.
Julian Evans-Pritchard Senior China Economist
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China Data Response

China Trade (Nov.)

Exports and imports beat expectations last month thanks to stronger demand and easing semiconductor shortages. In the near-term, the emergence of the Omicron variant is likely to support demand for China’s exports. But its impact further ahead is still uncertain. Meanwhile, we doubt the latest uptick in imports is the start of a sustained rebound given that property construction looks set to weaken further.

7 December 2021

China Economics Update

RRR cut today, rate cuts tomorrow?

The People’s Bank (PBOC) has just announced a cut to the required reserve ratio (RRR) for most banks, shortly after Premier Li and the Politburo each separately hinted at an increase in policy support. There is already evidence of fiscal easing, and we expect policy rate cuts from the PBOC before long. That said, there still appears to be little appetite at the central bank for a sharp rebound in credit growth, and we’re seeing an opening of the fiscal taps, not a flood. This easing will cushion but not stop growth from slowing. Drop-In: China trade and the commodities demand outlook 08:00 GMT/16:00 HKT, Tuesday 7th December https://event.on24.com/wcc/r/3546145/A9D34EF592141BEFCAC819ADB40359D5?partnerref=report  

6 December 2021

China Economics Weekly

Year-end policy bash to strike a more dovish tone

The upcoming Central Economic Work Conference in Beijing is likely to signal that policy is turning more supportive. But loosening will be measured, and growth over coming quarters will still slow.

3 December 2021

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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

China Chart Book

Party soon to target property and healthcare costs

A WeChat post by a prominent blogger voicing support for Xi Jinping’s “common prosperity” campaign has been widely re-published by state media, giving it a rare seal of Party approval. The post argues that the recent regulatory crackdown is just the start of a “profound revolution” prioritising workers over capitalists. If the author is to be believed, the next areas to be addressed will be high housing and medical costs. Education, housing and healthcare are often referred to as the “three mountains” that Chinese households must climb to achieve a comfortable life but the costs of each have soared. The government has pledged before to keep prices in check, but its efforts now appear set to intensify. Public housing and healthcare is likely to be expanded while private medical providers and real estate developers could soon face greater constraints on their ability to set prices and pursue profits.

31 August 2021

China Data Response

China Official PMIs (Aug.)

The latest surveys suggest that China’s economy contracted last month as virus disruptions weighed heavily on services activity. Industry also continued to come off the boil as supply chain bottlenecks worsened and demand softened.

31 August 2021
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