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Cyclical trough, tepid rebound

China will be buffeted in the first half of 2022 by COVID outbreaks and a further slowdown in property construction. Policy support should improve the picture later in the year, but mounting structural headwinds will limit the extent of any rebound. Drop-In (08:00 GMT/16:00 HKT, 27th Jan): China Outlook – Cyclical trough, tepid rebound. Join Mark Williams and Julian Evans-Pritchard for a discussion about China’s economic and policy outlook this year. Register here.
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China Economics Weekly

How quickly can activity rebound?

China’s previous COVID outbreaks offer a few clues to how quickly the economy will rebound this time. Even if further large-scale lockdowns are avoided, activity is unlikely to have recovered in full until near the end of the year, with the service sector slower to get back on its feet than industry.
Asia Drop-In (26th May, 0900 BST/16:00 SGT): Can Asia remain the low inflation exception? Join our 20-minute briefing about the region’s price and policy outlooks. Register here.

20 May 2022

China Economics Update

A helping hand for the housing market

Today’s reduction to the five-year Loan Prime Rate (LPR) should help drive a revival in housing sales, which have gone from bad to worse recently. But the lack of any reduction to the one-year LPR suggests that the PBOC is trying to keep easing targeted and that we shouldn’t expect large-scale stimulus of the kind that we saw in 2020.

20 May 2022

China Data Response

China Activity & Spending (Apr.)

The April data were even weaker than expected and are consistent with a sharp contraction in economic activity. Provided that the virus situation continues to improve, the economy should begin to rebound this month. But the recovery is likely to be tepid.

16 May 2022

More from China Economics Team

China Economic Outlook

Coming down to earth

China’s economy has been defying gravity thanks to elevated global demand but this support may now be fading. Meanwhile, last year’s policy easing has been fully reversed. An abrupt slowdown is not likely to follow, but highly-indebted firms, including many property developers, will come under increasing strain.

23 July 2021

China Activity Monitor

Still strong but probably close to a cyclical peak

Our China Activity Proxy (CAP) suggests that output remained strong in May but didn’t rise much further,  with slowing credit growth weighing on construction and China’s pandemic-induced export boom showing signs of peaking. We think output will, at best, tread water during the second half of this year.

23 June 2021

China Economics Weekly

PBOC is right to be relaxed about inflation

Producer prices are rising rapidly as the extraordinary surge in global demand for consumer durables during the pandemic has led to bottlenecks in supply. But the People’s Bank is right to not be too concerned about the implications for domestic inflation. There are no signs of broader price pressures or overheating in the labour market, for example. And export demand is unlikely to remain this strong indefinitely.

14 May 2021
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