China’s “sorpasso”

Our long-run forecasts suggest that China will still be the second largest economy, measured at market exchange rates, in 2050. The most likely scenario is that slowing productivity growth and a shrinking workforce prevent China ever passing the US. But there’s a possibility too that China overtakes around 2030 before dropping behind again as the demographic headwinds to its growth mount.
Mark Williams Chief Asia Economist
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China Economics Weekly

Local governments prepare to step in

Evergrande creditors face a bumpy few weeks with a string of bond coupon payments due. Even if the company can scrape together the cash – not at all certain, given that it just missed one payment deadline – its chances of repaying the principal on bonds maturing early next year are low. Officials are initially pushing creditors to find a solution that allows work on ongoing projects to resume. But if that fails, the company will most likely be broken apart at the hands of local governments.

24 September 2021

China Economics Update

Most developers are not on the brink of default

With a couple of exceptions, most major developers are in a much stronger financial position than Evergrande and should be able to weather a temporary spike in their borrowing costs amid contagion fears. Successfully navigating the structural decline in housing demand over the coming decade will prove more challenging. A drawn-out consolidation of the sector over many years seems more likely than an imminent wave of developer failures.

Drop-In: Evergrande – What are the risks to China and the world? Chief Asia Economist Mark Williams and Senior China Economist Julian Evans-Pritchard will be joined by Senior Markets Economist Oliver Jones to take your questions about the Evergrande situation. They’ll be covering the implications of collapse for China’s financial system and growth outlook, and assessing the global markets fallout. Register here for the 0900 BST/1600 HKT session on Thursday, 23rd September.

22 September 2021

China Economics Update

Where might markets be wrong about Evergrande?

If Evergrande were to cause a financial or economic shock it would either be because policymakers failed to contain financial contagion or because the company’s collapse precipitated a much bigger decline in construction activity than most investors currently expect. The latter is probably the bigger risk and hinges on whether the company’s demise triggers a substantial drop in property sales.

22 September 2021

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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