Regulatory crackdown or ideological campaign?

What looked like a tech crackdown, broadened to a crackdown on large private firms, then to a wider regulatory push. This week it started to resemble a society-wide ideological campaign aimed at fortifying the nation’s people and economy. K-Pop fandoms are out. Xi Jinping Thought is in. Meanwhile, there’s growing talk that property tax plans are being revived.
Mark Williams Chief Asia Economist
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China Economics Weekly

Capacity constraints put a ceiling on export outlook

In the long-run, the global spread of highly-transmissible coronavirus strains may make China’s zero-COVID stance untenable but the immediate response to concerns about B.1.1.529  is more likely to be a doubling down on the strategy, with rolling local lockdowns in response to any local cases and continued tight border controls. China’s exporters could benefit from another wave of lockdown-induced demand elsewhere in the world. But capacity limits, particularly at ports, potentially exacerbated by further port shutdowns, may limit their ability to meet orders.

26 November 2021

China Activity Monitor

Service sector recovery remains lacklustre

Our China Activity Proxy (CAP) shows that growth ticked up last month as energy shortages eased and the service sector continued to recover from virus disruptions over the summer. But the rebound remains lacklustre, with output still well below June’s peak. And while the outlook for home sales and exports has brightened in recent weeks, cooling construction activity still looks set to weigh on growth next year.

24 November 2021

China Economics Update

LPR on hold but wider easing already underway

The Loan Prime Rate (LPR) remained unchanged for the 19th consecutive month today. But officials are already easing policy in other ways, such as by relaxing constraints on mortgage lending. The PBOC has also pushed down bank funding costs via recent deposit rate reforms and July’s RRR cut, paving the way for future moves to nudge down lending rates using LPR cuts.

22 November 2021

More from Mark Williams

China Economics Weekly

Delta wave may have peaked but it won’t be the last

Aggressive containment measures, mass testing and quarantine appear already to be bringing China’s Delta outbreak under control. The economic cost should be fleeting – but it will be felt beyond China’s shores due to the closure of another major port terminal. And it won’t be the last bout of disruption. Meanwhile, the People’s Bank is likely to deliver a policy signal early next week in the form of an MLF operation.

13 August 2021

China Data Response

China Inflation / Trade (Jul.)

Rising factory gate prices for electronics products signal that supply chains are still tight but, with both semiconductor imports to China and China’s exports of electronics rising over the past couple of months, constraints appear to have eased somewhat.

9 August 2021

China Economics Weekly

Delta disruption spreads as vaccine exports soar

Escalating efforts to contain China’s first Delta variant outbreak will hurt some sectors of the economy. But if they are as successful as they have been in the past, the overall damage will be fleeting and small. Meanwhile, a rise in infections classed as critical in China over recent days raises questions over whether China’s vaccines are as effective at reducing severity of infection from the Delta variant as several studies have shown they are against the regular variety. That matters beyond China’s borders: the government this week said that China is now exporting 200bn vaccine doses per month and that this pace will increase over the rest of the year.

6 August 2021
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