China

China Economics Focus

China Economics Focus

Mapping decoupling

China and countries that align more closely with it than with the US together account for around half of the world’s population. But the China bloc is far smaller economically than the US bloc and far more dependent on the rival bloc as a source both of imports and of export demand. Our decoupling map illustrates the economic challenge that division from the West would pose for China.

17 September 2021

China Economics Focus

The implications for China and the world of eCNY

In this Focus we detail what is known about China’s central bank digital currency and analyse its implications for China and the world. The Focus is fully updated to incorporate the latest publicly-available information, including the PBOC White Paper published on 16th July. One conclusion is that the launch of eCNY will do nothing to relax the constraints that have prevented the renminbi being widely adopted in international trade or as a reserve currency. Indeed, we argue that the People’s Bank will have to compel eCNY’s use for it even to take off within China.

21 July 2021

China Economics Focus

The implications for China and the world of eCNY

In this Focus we detail what is known about how China’s central bank digital currency (CBDC) will operate, when it will launch, what the People’s Bank is trying to achieve, and whether it will succeed. One conclusion is that the launch of eCNY will do nothing to relax the constraints that have prevented the renminbi being widely adopted in international trade or as a reserve currency. Indeed, we argue that the People’s Bank will have to compel eCNY’s use for it even to take off within China.

27 May 2021
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China Economics Focus

The 14th Five-Year Plan

China’s new policy blueprint seeks above all to promote a large and hi-tech manufacturing sector, both as a defence against decoupling by the West and as a source of productivity gains. Policymakers are pinning their hopes on rapid domestic innovation to leapfrog foreign rivals and to reduce the environmental costs of growth. But if rapid technological gains don’t materialise, they will face tricky trade-offs between their targets for economic growth, the environment and greater self-sufficiency.  

China Economics Focus

Introducing our new China Activity Proxy (CAP)

For over a decade, we have tracked the performance of China’s economy independently from the official GDP figures using our China Activity Proxy (CAP). We are now introducing a revamped version of this popular indicator. In this Focus, we discuss why an alternative measure of economic growth in China is needed, how the new CAP improves on the original model and the advantages it has over official GDP.

China Economics Focus

Lasting blow to supply capacity is not inevitable

It is by no means inevitable that the coronavirus crisis puts a big permanent hole in the supply capacity of economies (i.e. their ability to produce goods and services). With the right government policies, many economies should be able more or less to revert to the path of output they were on before the crisis. Nonetheless, with demand likely to be slow to recover fully, this could still take several years. And there will be several important exceptions to this generally optimistic picture.

China Economics Focus

China’s stimulus plans and the implications for growth

The fiscal plans unveiled by China’s leadership today are as expansive as those in 2009 but credit growth will remain far more constrained. The focus again is overwhelmingly on measures to boost investment, primarily infrastructure. We expect stimulus to succeed in lifting growth in the near-term – China should emerge from the coronavirus downturn faster than other major economies. But another wave of state-mandated investment will only cement China’s structural economic problems more firmly in place.

China Economics Focus

The economic impact of the new coronavirus in China

China’s economy is likely to contract sharply in the first quarter, as a result of the measures that have been taken to limit the spread of the new coronavirus. The apparent slowdown in new infections in the last few days should raise hopes that output will bounce back quickly, leaving no lasting economic damage. But a slower recovery that would have larger and more prolonged effects cannot be ruled out until activity has started to return to normal. The daily data that we are monitoring give no signal that this is happening yet.

12 February 2020
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