Property comedown, vaccine setback

The macro backdrop behind Evergrande’s latest profit warning is a rapidly cooling property market. Home sales have fallen below 2019 levels in recent weeks, with the prop to demand from excess household savings built up earlier in the pandemic fading. Meanwhile, China’s reluctance to embrace foreign vaccines that would aid its fight against COVID-19 was on show this week.
Julian Evans-Pritchard Senior China Economist
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China Economics Update

PBOC takes a bigger bite of the easing apple

The People’s Bank (PBOC) has stepped up its efforts to loosen monetary conditions, following up last month’s reduction to the Loan Prime Rate (LPR) with cuts to the rates at which it lends to banks. Another LPR cut this month is now a given and we expect additional easing measures further ahead.

17 January 2022

China Data Response

China GDP (Q4), Activity & Spending (Dec.)

Official GDP growth beat expectations last quarter and in q/q terms was the strongest since late 2020. But we are sceptical that this reflects the reality on the ground – our China Activity Proxy suggests output was largely stagnant last quarter. With the property sector still struggling and virus disruptions becoming more frequent, economic momentum is likely to remain weak throughout much of this year.

17 January 2022

China Economics Weekly

Omicron arrives

It is too soon to conclude that Omicron will swamp China’s efforts to suppress COVID. But the policy of “dynamic clearing” is facing a severe test. Data due over the coming week will reveal the economic strain that it is causing.

14 January 2022

More from Julian Evans-Pritchard

China Activity Monitor

Delta speed bump not the only drag

Our China Activity Proxy (CAP) suggests that output dropped back further in July. This shouldn’t be dismissed as a temporary setback due to the recent virus outbreak. The main drag last month came from industry and construction, where the key headwinds are tight credit conditions and supply bottlenecks.

24 August 2021

China Economics Weekly

Growth jitters, tech woes, Huarong lifeline

There was plenty for China watchers to digest during the past week. Weak data for July added to growth fears, with virus disruptions and tighter credit conditions meaning that worse is still to come. Meanwhile, a flurry of regulatory action and signs of a mounting campaign to reduce inequality further clouded the outlook for China’s big tech firms, and productivity growth more generally. On a more positive note, officials made some headway in defusing financial risks.

20 August 2021

China Economics Update

LPR on hold but cuts on the horizon

Commercial banks left the Loan Prime Rate (LPR) on hold for a 16th straight month today. But with the economy losing momentum, we think it won’t be long before the PBOC is guiding rates lower. Even so, another round of large-scale credit-led stimulus doesn’t appear to be on the cards for now.

20 August 2021
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