Households spending more, RMB gains to continue

Consumer spending continued to strengthen during the Golden Week holiday, helping to dispel some concerns about the lopsided nature of China’s recovery and providing a further tailwind today to the renminbi. We expect the currency to continue strengthening. Meanwhile, there was further evidence of the rising global antipathy towards China that we think will ultimately lead to decoupling. In the near-term though, the opposite is happening: China’s exporters are significantly increasing their global market share. Data due in the coming week are likely to show that exports are rising at a double-digit rate year-on-year.
Mark Williams Chief Asia Economist
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China Activity Monitor

Starting 2022 on the back foot

Our China Activity Proxy (CAP) suggests that China’s economy was still struggling to regain momentum at the end of last year amid troubles in the property sector and recurrent COVID outbreaks which continue to depress service sector activity. We think these headwinds will continue to hold back activity during the first half of this year.

24 January 2022

China Economics Weekly

Some relief for property developers

This week’s cut to policy rates is one of a succession of recent moves designed to stabilize residential property sales. Developers have also been given a little more breathing room in terms of their access to financing. These steps may not feed into a recovery in project starts, given the poor structural outlook for property demand. But they improve the immediate outlook for many developers. Meanwhile, Tianjin’s Omicron outbreak appears to be under control and COVID cases nationally have dropped to a two-month low. That appears to be encouraging slightly more people to make the trip home for Lunar New Year than a year ago. We’ll be discussing our expectations for policy, zero-COVID and the economy on Thursday (08:00 GMT/16:00 HKT) in an online briefing timed to coincide with publication of our next Outlook report. Please register here to join us and let us know in advance of any questions you’d like us to address.  

21 January 2022

China Economics Update

Deposit rates may be next PBOC target

Today’s reductions to both the one-year and five-year Loan Prime Rates (LPR) continue the PBOC’s efforts to push down borrowing costs. We expect additional easing to follow in the coming months, including measures to push down deposit rates. But policymakers still appear reluctant to engineer a sharp pick-up in credit growth.

20 January 2022

More from Mark Williams

China Economics Weekly

Changing views on China, export demand peaking

While China’s Communist Party was celebrating its achievements at its official centenary this week, a global survey revealed a sharp decline in popular enthusiasm for economic engagement with China in developed economies. That suggests that if governments in the West push for decoupling, they’ll find the public is receptive.

2 July 2021

Emerging Markets Economics Update

China is about to flood EMs with vaccines

By September, China could be in a position to export 340mn vaccines doses each month – more than most regions of the world have administered in total so far. China’s vaccines are less effective than others, but have been found to suppress outbreaks where they have been used if a high enough share of a population is vaccinated. Large-scale exports from China could therefore give a significant boost to the prospects of many EMs now struggling to vaccinate because of a lack of vaccine supply.

17 June 2021

Emerging Asia Economics Update

Taiwan: severe capacity constraints but few inflation fears

Taiwan’s economy is struggling with severe capacity constraints but there are few signs in recent data that this is fuelling broad-based wage or price pressure. That’s a stark contrast with the US, and should provide some reassurance to central bankers not just in Taipei but also further afield that economic recoveries, even if strong, won’t necessarily trigger inflation.

10 June 2021
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