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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.
Julian Evans-Pritchard Senior China Economist
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China Chart Book

Domestic weakness frees up ports for exports

The Omicron virus wave in China appears to have eased global shipping bottlenecks rather than worsened them as many had feared. Firms were able to re-route shipments through other ports to avoid disruption in Shanghai. And weaker goods demand domestically freed up port capacity that could be used for export shipments. In the past three months, container throughput for foreign trade has risen at its fastest pace in over a year. There has probably been some movement of vessels from domestic to foreign routes too. Together, the increase in export-directed capacity helps explain why freight rates out of China have fallen sharply. Asia Drop-In (30th June, 09:00 BST/16:00 SGT): Are Asia’s central banks behind the curve? Can the Bank of Japan and People’s Bank of China continue to go against the grain? Find out in our special session on what global monetary tightening looks like in Asia. Register now.  

28 June 2022

China Activity Monitor

CAP: Output to stagnate in 2022 despite latest bounce

Our China Activity Proxy suggests that around half of the drop in output during the recent virus wave reversed in May. This recovery looks to have continued in June. But a lot of damage has already been done and we now doubt that China’s economy will grow at all this year. Asia Drop-In (30th June, 09:00 BST/16:00 SGT): Are Asia’s central banks behind the curve? Can the Bank of Japan and People’s Bank of China continue to go against the grain? Find out in our special session on what global monetary tightening looks like in Asia. Register now.  

22 June 2022

China Economics Weekly

GDP target unattainable, shipping disruption

China’s statistics office is adept at massaging GDP data. But with many of the indicators that feed into GDP showing year-on-year contractions in April and May, even it won’t be able to deliver published growth at the rate the government wants this year. Meanwhile, the latest port throughput data suggest that Shanghai’s lockdown had a much smaller impact on shipping than commonly supposed.

17 June 2022

More from Julian Evans-Pritchard

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

China Economics Weekly

Testing, testing, testing

The outlines of a new, more stringent zero-COVID approach are emerging in China, in the wake of the failure to control infections in Shanghai. If successful, there should be less supply chain disruption than has been seen recently. But greater vigilance will prevent much service sector activity returning to normal. Meanwhile, there is no sign in real-time data on construction activity of any infrastructure push getting underway.

13 May 2022

China Data Response

China Bank Lending & Broad Credit (Apr.)

Lending was much weaker than expected last month as lockdowns weighed on credit demand. This should nudge the PBOC to announce further easing measures soon. But the central bank continues to signal a relatively restrained approach.

13 May 2022
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