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Initial thoughts on the National People’s Congress

China’s retention of an “about 6.5%” growth target for GDP in 2018, while expected, undermines the argument that growth is being demoted as a central policy concern. Growth is likely to slow we believe, not least because the finance ministry is today projecting unusually-sharp policy tightening. But the desire to sustain rapid growth implies that, when that happens, stimulus will resume, most likely in the form of interest rate cuts.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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More from China

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

More from Marcel Thieliant

Australia & New Zealand Economics Update

Hawkish RBA to hike rates in early-2023

The Reserve Bank of Australia delivered a hawkish surprise by not delaying the tapering of its bond purchases. And by predicting that it will hit its full employment mandate and make further progress towards its inflation target, it has opened the door for earlier rate hikes than its current guidance of 2024.    

3 August 2021

Japan Economics Update

What would a hard lockdown mean for Japan?

With the Delta variant lifting new infections to a record-high, calls for a “hard” lockdown are growing. If that happened, services activity would fall further but we doubt that the government would shut down industry. And with households and firms now better prepared to deal with virus restrictions, it seems likely that GDP wouldn’t revisit last year’s lows.  

2 August 2021

Australia & New Zealand Economics Weekly

Activity to rebound in fourth quarter

With the Sydney lockdown set to extend into the fourth quarter, we’ve lowered our Q3 GDP forecast further. However, we still think that the economy will bounce back in Q4 as vaccine hesitancy is collapsing and vaccine supply is set to pick up. As such, we’re sticking to our view that the RBA will hike interest rates in early-2023.

30 July 2021
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