Trade (Mar.)

Shipments picked up last month as factories re-opened and domestic demand began to recover. But with economic activity in the rest of the world now collapsing, the worst is still to come for China’s export sector.
Julian Evans-Pritchard Senior China Economist
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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

China Activity Monitor

Service sector recovery remains lacklustre

Our China Activity Proxy (CAP) shows that growth ticked up last month as energy shortages eased and the service sector continued to recover from virus disruptions over the summer. But the rebound remains lacklustre, with output still well below June’s peak. And while the outlook for home sales and exports has brightened in recent weeks, cooling construction activity still looks set to weigh on growth next year.

24 November 2021

China Economics Update

LPR on hold but wider easing already underway

The Loan Prime Rate (LPR) remained unchanged for the 19th consecutive month today. But officials are already easing policy in other ways, such as by relaxing constraints on mortgage lending. The PBOC has also pushed down bank funding costs via recent deposit rate reforms and July’s RRR cut, paving the way for future moves to nudge down lending rates using LPR cuts.

22 November 2021

More from Julian Evans-Pritchard

China Data Response

China Activity & Spending (May)

Headline growth on all the key indicators dropped back last month. But after adjusting for base effects the picture was more mixed, with investment slowing, industrial output growth holding steady and retail sales accelerating. While there is still scope for a further recovery in consumption, we think investment and exports are set to cool over the coming months.

16 June 2021

China Economics Weekly

US-China rivalry: industrial policy, vaccine diplomacy

The US Senate took a leaf out of China’s industrial policy playbook this week by passing USICA, a bill that earmarks $190bn in federal funding for strategic sectors and bears striking similarities with Beijing’s controversial Made in China 2025 plan. But despite some overlap, China’s industrial policies clearly remain far broader in scope and run a much greater risk of hindering rather than helping productivity growth. Another burgeoning area of US-China competition is vaccine diplomacy. Here China has the clear lead, at least in terms of the quantity of vaccine exports. And the ongoing surge in domestic production and vaccination rates means that China could soon flood the world with doses on a far larger scale than other countries, including the US.

11 June 2021

China Data Response

China Bank Lending & Broad Credit (May)

Broad credit growth continued to slide in May and is now at its slowest since February last year. Evidence of policy tightening weighing on borrowing is clearest in bank loan growth which, apart from during last year’s lockdown, is at its weakest in nearly two decades. This will become a headwind to the economy in the second half of the year.

10 June 2021
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